By Anuja Bharat Mistry and Alexander Marrow
July 9 (Reuters) – PepsiCo beat estimates for second-quarter revenue on Thursday as demand for prebiotic sodas, zero-sugar drinks and protein-rich snacks helped counter weaker North American food sales amid mounting pressure on financially stretched consumers.
Food and beverage companies are contending with persistently high oil prices due to the Iran war that have increased their packaging and logistics costs, while having to tailor products to health-conscious shoppers seeking better value.
PepsiCo, whose shares fell about 1% in premarket trading, is expecting higher input cost inflation in the second half of the year, but CFO Steve Schmitt said refund claims for tariffs paid last year and productivity savings should help cushion the hit.
PepsiCo had cut prices on brands such as Lay’s and Doritos by up to 15% in North America to lure back budget-conscious consumers, who are increasingly shifting toward cheaper alternatives and smaller pack sizes amid persistent inflation concerns.
“Results were tempered in the quarter as U.S. food and beverage category performance moderated with consumer budgets tightening due to rising inflationary pressures,” CEO Ramon Laguarta said in prepared remarks.
PepsiCo is refreshing brands and introducing products without artificial colors or flavors, such as Gatorade Lower Sugar, as well as protein-packed offerings, such as Propel powder and Quaker Protein Rice Crisps, aimed at a growing preference toward healthy diets.
North America food sales fell 2%, primarily due to lower effective net pricing, Schmitt said.
The company kept its annual forecasts unchanged, expecting fiscal 2026 organic revenue growth in the range of 2% to 4% and core constant currency earnings per share to rise between 4% and 6%.
“Pepsi’s challenge isn’t building iconic brands, it’s keeping them relevant,” eMarketer analyst Suzy Davidkhanian said.
“Consumers are still spending, but they’re becoming more intentional about where they spend, and they expect the brands they already know to evolve with them by giving them more choice,” she added.
Quarterly revenue rose 6.4% to $24.18 billion from a year earlier, beating analysts’ estimates for a 5.4% increase to $23.95 billion, according to data compiled by LSEG.
PepsiCo posted quarterly core earnings per share of $2.20, compared with $2.12 a year ago.
(Reporting by Anuja Bharat Mistry in Bengaluru and Alexander Marrow in London; Editing by Anil D’Silva)
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