By Anuja Bharat Mistry and Alexander Marrow
July 9 (Reuters) – PepsiCo on Thursday highlighted the strong performance of health-focused prebiotic sodas, zero-sugar drinks and protein-rich snacks as it navigates higher costs and pressure on financially stretched consumers.
The company, whose shares edged around 2% lower in premarket trading, beat estimates for second-quarter revenue, helped by its beverage and international units, even as North America food sales slipped about 2% due to price cuts.
PepsiCo had cut prices on brands such as Lay’s and Doritos 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.
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.
PepsiCo 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.
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)
