Full Breakdown
PepsiCo Confronts North American Sales Slump While International Demand Holds
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Core Challenge: Weak U.S. and Canadian Performance
In the third quarter that ended September 5, PepsiCo’s North American snack and beverage volumes stalled. Frito-Lay snack volumes were flat year-over-year, and beverage volumes fell 2 percent. The region accounted for roughly 56 percent of the $25.27 billion net revenue reported for the quarter.
International Growth Provides Cushion
Outside the United States, PepsiCo posted stronger results. International markets, which generate 41 percent of total revenue, drove a 5.6 percent rise in net revenue and a 4 percent increase in global snack volumes—the fastest growth since 2021. The firm highlighted World Cup-related demand for Lay’s chips and market-share gains in China and Brazil, with snack volumes climbing 11 percent in the Asia-Pacific region.
Financial Highlights and Outlook Revision
Net income rose 17 percent to $3.07 billion, and adjusted earnings per share reached $2.34, beating the $2.29 consensus. PepsiCo now expects full-year revenue growth of 6 percent (the high end of its prior 4-6 percent range) and adjusted earnings-per-share growth of 1 percent to 2 percent, down from the earlier 4-6 percent target. A $178 million one-time tariff refund contributed roughly four percentage points to core operating-profit growth; without it, core profit would have been flat to slightly below the prior year.
Official Statements & Responses
Chief Executive Ramon Laguarta told analysts that the company is “putting all the urgency of the business and the focus in improving our performance in soft drinks.” The firm announced single-digit price hikes on select chips, Ruffles, Doritos, SunChips and some sodas, noting that the new prices will remain lower than early-year levels. Analysts from RBC Capital Markets, JPMorgan and Wells Fargo downgraded the stock, citing persistent North American weakness and inflationary pressure on margins.
Criticism & Opposition
The National Legal and Policy Center raised governance concerns at PepsiCo’s May 6 annual meeting, proposing an independent board chair to improve oversight of CEO-Chair Ramon Laguarta. The proposal was rejected, leaving the current board structure in place. Commentators warned that the board’s inability to independently evaluate the CEO could hinder accountability as the company seeks to reverse its six-year erosion of the North American franchise.
Verbatim Quotes
- “We’re not satisfied with the performance in the U.S.,” — Ramon Laguarta, CEO
- “We’re putting all the urgency of the business and the focus in improving our performance in soft drinks,” — Ramon Laguarta, CEO
- “While there have been some signs of progress, rate of improvement has stalled given the inflationary pressures,” — Nik Modi, capital markets analyst
What’s Next
PepsiCo plans to implement cost-reduction initiatives over the coming months and to continue raising prices on selected snacks and beverages, while keeping those hikes below the levels seen in 2024. The company is testing a combined snacks-and-beverages model in certain markets and evaluating the refranchising of bottling operations. Guidance for the current fiscal year now projects earnings-per-share growth of 1 percent to 2 percent, with the firm aiming to stabilize North American volumes amid ongoing inflationary pressures.