PepsiCo Partners With China’s Dada For Carbonated Drinks Brand

PepsiCo has partnered up with Dada Group, China’s leading local on-demand delivery and retail platform, in a move to boost its market share in the carbonated drinks market.

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As part of the partnership aims to develop a “flagship” carbonated drinks brand to improve online distribution and marketing efforts across the supply chain.

PepsiCo (PEP) has been collaborating with JDDJ, Dada’s local on-demand retail platform, since 2018 on several campaigns including PepsiCo’s football package, the UEFA Champions League event and PepsiCo’s “For The Love of It” campaign. As a result, PepsiCo has seen its sales increase to more than 40% of total carbonated beverage sales on JDDJ.

PepsiCo also announced the launch of the “Bring Happiness Home” marketing campaign in collaboration with JDDJ. Originally created in 2012 by PepsiCo, the campaign has become one of the most anticipated marketing campaigns during the Chinese Spring Festival.

JDDJ joined the campaign in 2020 and received 170 million views online, which resulted in PepsiCo’s sales on the platform nearly doubling compared to the previous year. (See PEP stock analysis on TipRanks)

Citigroup analyst Wendy Nicholson recently upgraded PEP’s stock rating to Buy from Hold, and lifted the price target to $169 (17% upside potential) from $148. In a commentary cited by Bloomberg, Nicholson wrote that PepsiCo shares could benefit from improving profit margins for the company and the stock’s multiple should “expand considerably from current levels.”

Consensus among analysts is a Moderate Buy based on 6 Buys and 6 Holds. The average price target of $152.67 implies upside potential of 5.5% over the next 12 months.