What's going on?

On Tuesday, PepsiCo�s stock dropped by 2%. It had a better-than-expected quarter but warned investors its annual profit wouldn�t be as fizzy as hoped.

What does this mean?

Investors were focused on Pepsi�s business in North America where, in quarters past, the growth of its drinks business had been on the slide � partly thanks to consumers ditching sodas for healthier options. But Pepsi came good � drink sales in North America were over 2% higher than a year ago. And the company�s quarterly profit beat investors� expectations, too.


Pepsi said it�s not planning cannabis investments like its arch-rival Coca-Cola (which is considering infused drinks) and beer company Constellation Brands (tweet this). Pepsi also cautioned that currency fluctuations would hurt this year�s profit going forward (more below) � likely sending its shares down.

Why should I care?

The bigger picture: Healthy and happy helped PepsiCo.

The trend of consumers favoring health and wellness-centered products � including in food and drink � looks bright-eyed and bushy-tailed. Pepsi�s snap back to growth in North America was helped by the company launching premium bottled water brand Lifewtr and sparkling water brand Bubly � while its sports drink brand, Gatorade, welcomed healthier options to the fold. In August, PepsiCo announced a deal to buy SodaStream, which it likely hopes will bring the company healthy growth in the future.

For markets: A strong dollar can hurt US companies� profits.

The US dollar has bubbled up this year, partially thanks to a strong economy � demand for products is up, pushing their prices higher (along with interest rates), and indicating to investors that the US could be a good place to park their cash. A strong dollar (as investors buy the dollar, its value rises) can help the US economy grow more � since its currency goes further abroad (imports are cheaper). But for companies, like PepsiCo, that turn their foreign profits into dollars, a strong dollar means that foreign cash buys less stateside � hampering their financial results.