PepsiCo Faces Fifth Straight Quarter of Declining North American Demand

NEW YORK — PepsiCo reported mixed quarterly results on Tuesday, marking the fifth consecutive quarter of declining demand for its snacks and beverages in North America. The company’s shares fell more than 2% in premarket trading following the announcement.

The food and beverage giant posted fourth-quarter net income of $1.52 billion, or $1.11 per share, up from $1.3 billion, or 94 cents per share, a year earlier. Excluding restructuring and other charges, PepsiCo earned $1.96 per share. However, net sales dropped slightly to $27.78 billion, missing Wall Street estimates of $27.89 billion.

PepsiCo’s organic revenue, which excludes acquisitions and foreign exchange impacts, rose 2.1% in the fourth quarter. Worldwide volume increased 1% for both convenient foods and beverages. However, the company’s North American market struggled, with Frito-Lay North America‘s volume falling 3% and the North American beverage unit reporting a 3% decline in quarterly volume.

“In 2024, the salty and savory snack categories underperformed broader packaged food, following multiple years in which these categories had outperformed packaged food,” said CEO Ramon Laguarta and CFO Jamie Caulfield in prepared remarks. They attributed the decline to cautious consumer spending and higher food prices.

Quaker Foods North America, still recovering from a December recall, saw its volume drop 6%. Executives expect performance to improve in 2025 as the company moves past the recall’s impact.

Despite the challenges, there were some bright spots. Gatorade gained market share, and Mountain Dew Baja Blast surpassed $1 billion in annual sales. PepsiCo also plans to invest heavily in product innovation, including ethnic-inspired flavors through brands like Sabritas and Natu Chip, to spur demand.

For 2025, PepsiCo projects a low-single-digit increase in organic revenue and a mid-single-digit rise in core constant currency earnings per share. “Looking ahead to 2025, we will continue to build upon the successful expansion of our international business, while also taking actions to improve performance in North America,” Laguarta said.

Analysts remain cautious. RBC Capital Markets analyst Nik Modi noted, “Frito-Lay business is still finding its footing as elevated prices weigh on snacking trends … beverage business also continues to lose share, and we believe PepsiCo is reaching its pain threshold.”