PepsiCo's CFO Talks Earnings And Product Innovation

Shares of PepsiCo, Inc. PEP were trading lower by around 0.8 percent Tuesday despite the company reporting a top-and-bottom line earnings beat.

Investors had much to cheer, including 3 percent revenue growth, 13 percent boost in earnings per share and continued improvements in productivity that both expand margins and can be used to invest in new businesses, PepsiCo CFO Hugh Johnson explained on CNBC's "Squawk on the Street."

Meanwhile, around 8.5 percent of PepsiCo's total revenue comes from product lines that were introduced within the last three years and generates superior revenue per pound, the executive continued. That also explains why the company reported "muted" overall volume growth compared to revenue growth.

For example, PepsiCo introduced a new premium water product called Lifewtr during the 2017 Super Bowl that's sold at a "good price premium." In addition, PepsiCo launched a new snack product called Lay's Poppables, which is also light from a weight perspective and is performing well in terms of revenue generation. These products reinforce the company's commitment to new product lines and delivering to investors strong results.

PepsiCo's new product lines are in reaction to an overall shift in consumer preference away from carbonated beverages, Johnson added. In fact, the company mostly holds leadership positions in non-carbonated beverage categories such as juice and iced tea.

By Johnson's own admission, sales of PepsiCo's core soft drinks were indeed soft in the quarter and the company feels an uptick in advertising will improve sales.

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