Earnings Preview: PepsiCo

OVERVIEW: Like all soft drink and food companies, PepsiCo, the world's No. 2 soft drink company, has been struggling with higher commodity prices, especially for corn, cooking oil and energy. The prices surged to record levels in 2007 and hurt profits at most food and beverage companies.

A slowdown in demand for carbonated soft drinks has been another problem. More consumers are reaching for water and juice drinks to avoid the sugar, calories and artificial ingredients in some sodas.

PepsiCo, like its competitors, has been acquiring beverage companies and making deals with others to broaden its portfolio.

In September, PepsiCo and consumer products maker Unilever NV said Friday they would market and distribute Lipton-brand ready-to-drink tea products in 11 additional countries beginning in January.

The new agreement was an addition to the original 1991 deal between the two that set up a joint venture to market and distribute the Lipton ready-to-drink teas.

In October, PepsiCo agreed to buy Brazilian snack company Comercio de Doces Lucky Ltda., which makes the popular Torcida and Fofura brands.

In November, the company along with its partner Starbucks Corp. launched Starbucks Frappucino bottled drinks in China.

Also in November, PepsiCo and its bottler PepsiAmericas Inc. bought the remaining 20 percent interest in Sandora, a Ukraine-based juice company, for $136.7 million. In August, the two companies paid $542 million for an 80 percent stake in Sandora. At the time, they said they planned to buy the rest of the company.

PepsiAmericas holds a 60 percent interest in the venture and PepsiCo owns the rest.