Prime Highlights
- PepsiCo’s Q2 revenue rose 6.4% to $24.18 billion, beating estimates.
- Zero-sugar drinks and protein snacks offset weaker North American food sales.
Key Facts
- PepsiCo cut prices on Lay’s and Doritos by up to 15% in North America.
- Core earnings per share rose to $2.20, up from $2.12 a year earlier.
Background
PepsiCo reported stronger-than-expected second-quarter revenue this week, as rising demand for prebiotic sodas, zero-sugar drinks and protein-rich snacks helped offset weaker food sales in North America amid pressure on financially stretched consumers.
Food and beverage companies continue to face high oil prices linked to the Iran war, which have pushed up packaging and logistics costs. Companies are also adapting products to suit health-conscious shoppers seeking better value. After the results came out PepsiCo shares dropped about 1% in premarket trading.
The company expects higher input cost inflation in the second half of the year. However, CFO Steve Schmitt said refund claims for tariffs paid last year, along with productivity savings, should help cushion the impact. PepsiCo had already cut prices on brands such as Lay’s and Doritos by up to 15% in North America to attract budget-conscious consumers shifting toward cheaper alternatives and smaller pack sizes.
CEO Ramon Laguarta said results moderated during the quarter as U.S. food and beverage category performance softened due to tightening consumer budgets and inflationary pressure. North America food sales fell 2%, mainly due to lower effective net pricing, Schmitt noted.
PepsiCo is refreshing several brands and introducing products free from artificial colours or flavours, including Gatorade Lower Sugar, alongside protein-focused offerings like Propel powder and Quaker Protein Rice Crisps.
The company maintained its annual forecast, expecting fiscal 2026 organic revenue growth between 2% and 4%, with core constant currency earnings per share rising 4% to 6%. Quarterly revenue rose 6.4% to $24.18 billion, beating estimates, while core earnings per share reached $2.20, up from $2.12 a year earlier.
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