PepsiCo Exceeds Quarterly Revenue Forecasts Due to Strong Soda Demand

• International beverages volume grew 3% in Q4, boosted by localized flavors in markets like India and Brazil, while North America food volumes declined 1%
• PepsiCo plans price cuts up to 15% on products like Lay's and Cheetos following consumer complaints about high costs and activist investor Elliott Management's push for changes
• The company is reducing its U.S. product offerings by roughly 20% and rebranding key products to appeal to consumers seeking cleaner ingredients amid weight-loss drug usage and the 'Make America Healthy Again' movement

PepsiCo Exceeds Q4 Revenue Forecasts on Strong International Soda Sales

Key Financial Results:

PepsiCo reported Q4 revenue of $29.34 billion for the quarter ended December 27, surpassing analyst estimates of $28.97 billion. International beverage volumes grew 3%, while overall beverage segment volumes increased 1%.

Performance Drivers:

The company benefited from robust soda demand in international markets, particularly India and Brazil, where localized flavors drove sales. Low-sugar and zero-sugar beverages showed strength in the U.S. market, aligned with changing consumer preferences.

Business Challenges:

North America food volumes declined 1% in Q4, following a 4% drop in the previous quarter. The struggling snacks division faces pressure from activist investor Elliott Management, which recently took a stake and is pushing for significant changes.

Strategic Initiatives:

PepsiCo announced plans to cut prices up to 15% on products like Lay's and Cheetos in response to consumer price complaints. The company will reduce its U.S. product portfolio by approximately 20% this year and has already closed some manufacturing plants and cut jobs to reduce costs.

The company is rebranding key products to emphasize cleaner ingredients, responding to increased weight-loss drug usage and the "Make America Healthy Again" movement. Beverage offerings are being updated with prebiotic sodas and expanded low-sugar options.

Market Context:

Like competitors P&G and Coca-Cola, PepsiCo is focusing on lower price points and smaller pack sizes to address inflation-pressured consumers, particularly those affected by delayed food stamp benefits during the recent government shutdown.