PepsiCo managed to deliver a win, at least on paper.
On Thursday, the global snack and beverage giant reported second-quarter earnings that beat analysts’ expectations, with adjusted earnings per share at $2.12 versus the anticipated $2.03. Revenue also came in strong, hitting $22.73 billion, ahead of the $22.27 billion expected by Wall Street.
But there was a catch. Net income dropped significantly year over year, from $3.08 billion to $1.26 billion, a sign that pressure is mounting behind the scenes. The stock still climbed around 2% in premarket trading, signaling investor relief or perhaps short-term memory.
Behind the Numbers: Flat Sodas and Slipping Snack Baskets
The headline numbers painted a sunny picture, but deeper inside the report, there were signs of changing tides.
PepsiCo’s total volume that’s the number of items actually sold dropped 1.5% for its food division and stayed flat for beverages globally. In North America, things looked even tougher. Food volumes, including Frito-Lay and Quaker brands, were down 1%, and drink volumes shrank 2%.
CEO Ramon Laguarta tried to ease concerns, noting that domestic trends are improving. He pointed to Pepsi Zero Sugar as a standout performer, with double-digit volume growth, and said the original Pepsi drink also saw gains during the quarter.
Still, fewer bags of chips and bottles of soda are moving off U.S. shelves.
A Closer Look at the Quarter
Here’s a quick snapshot of what PepsiCo reported versus Wall Street expectations:
| Metric | Reported | Expected |
|---|---|---|
| Earnings Per Share (adjusted) | $2.12 | $2.03 |
| Revenue | $22.73B | $22.27B |
| Net Income | $1.26B | $3.08B (previous year) |
| Organic Revenue Growth | +2.1% | Not specified |
| Global Food Volume | -1.5% | — |
| Global Drink Volume | Flat | — |
Pepsi’s strategy now hinges on squeezing more out of every dollar and every warehouse.
Making the Business Leaner, One Plant at a Time
Pepsi is slimming down.
During the quarter, the company closed two manufacturing plants in North America tied to its food business. Transportation and logistics are also under the microscope, with executives aiming to boost efficiency across the board.
Marketing is getting a tune-up, too. Pepsi said it’s re-evaluating how and where it spends, aiming for smarter returns rather than bigger budgets. Executives hinted at cutting any overlap between the food and beverage teams, aiming for tighter integration instead of separate silos.
They’re watching their wallets just like their customers.
Winning Over Shoppers in a Shifting Market
Fewer snacks in carts doesn’t mean Pepsi is sitting back.
The company is leaning into protein-heavy and culturally specific products think Siete Foods and Sabra to reach new audiences and win back attention. Executives say better shelf placement and stronger retail execution are part of the game plan, especially in the competitive U.S. market.
Some bright spots showed up, even in the gloom:
-
Pepsi Zero Sugar saw double-digit volume growth.
-
Regular Pepsi volume also increased bucking broader drink trends.
-
Organic revenue growth clocked in at 2.1% globally.
-
Despite softer volume, overall revenue rose 1% due to pricing.
But if you ask the average shopper, they’re more cautious these days and that’s not changing overnight.
Full-Year Forecast Stays the Course For Now
Even with all the movement, Pepsi is sticking to its earlier guidance.
The company reaffirmed its full-year outlook, predicting that earnings per share will remain roughly flat compared to last year, adjusted for currency fluctuations. Organic revenue growth is expected to stay in the low single digits.
This confidence comes after a downward revision last quarter, which was blamed on global tariffs, economic shakiness, and a consumer that’s grown more hesitant. The real test now? Whether the next two quarters show recovery or more retreat.
