PepsiCo mentioned Tuesday that high prices and altering consumer tastes have weakened U.S. demand for its snacks and drinks, nevertheless it’s assured it may possibly flip that round within the coming yr.
The Buy, New York-based firm mentioned its income fell barely to $27.78 billion within the fourth quarter. That was wanting Wall Avenue’s forecast of $27.89 billion, in accordance with analysts polled by FactSet.
U.S. demand flagged final yr after two years of outsize, double-digit value will increase. The typical value of a 16-ounce bag of potato chips peaked at $6.68 in October 2023, in accordance with authorities knowledge.
PepsiCo hit the brakes on costs, which rose 4% globally in 2024. The corporate targeted on making its snacks extra reasonably priced, including product promotions, extra chips per bag, and worth packs. It additionally invested extra closely in its Chester’s and Santitas worth manufacturers, which noticed robust income progress final yr.
In a convention name Tuesday, CEO Ramon Laguarta mentioned these efforts are paying off and customers have begun shopping for salty snacks once more. Nonetheless, North American gross sales volumes for each Frito-Lay snacks and drinks fell 3% within the October-December interval.
PepsiCo can also be intently watching a longer-term pattern towards more healthy snacking, Laguarta mentioned. The corporate isn’t seeing a lot influence from the rising use of GLP-1 weight reduction medicine like Wegovy, he mentioned. However individuals are searching for smaller, portion-controlled snacks, healthier ingredients like complete grains and decrease sodium and fats.
“There’s the next degree of consciousness generally of American customers towards well being and wellness,” he mentioned.
PepsiCo is well-positioned to fulfill that want with merchandise like Pepsi Zero Sugar, SunChips and its Merely line of chips, which haven’t any synthetic colours or flavors, Laguarta mentioned. And extra wholesome, “permissible” snacks are coming, he mentioned.
“We’re very assured that our North American enterprise will speed up this yr,” Laguarta mentioned.
PepsiCo can also be making an attempt to amp up its away-from-home choices, like its Doritos Locos Tacos collaboration with Taco Bell and its Tostitos Cantina meals vans.
PepsiCo’s snack meals and beverage volumes each climbed 1% globally within the fourth quarter, with robust progress in Africa and Asia.
Web earnings rose 17% to $1.5 billion. Adjusted for one-time objects, PepsiCo earned $1.96, or two cents higher than analysts had forecast.
PepsiCo expects natural income progress within the low single digits in 2025. Natural income is adjusted for overseas foreign money exchanges and the influence of product acquisitions or divestments. The corporate reported natural income progress of two% in 2024.
The corporate, which closed 4 U.S. bottling vegetation in October, additionally plans to proceed a multiyear push to boost productiveness, together with including extra automation in its vegetation and warehouses.
PepsiCo shares fell 2% Tuesday.
—Dee-Ann Durbin, AP Enterprise Author
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