PepsiCo cut snack prices again, but not enough to get American consumers to buy more

By Tomi Kilgore

Beverage and snack giant's stock was having its worst day in 15 months as an earnings beat didn't prompt an increase in the full-year outlook

PepsiCo's North America business lagged, but strength in international business led to an earnings beat.

Shares of PepsiCo fell in early Thursday trading after the beverage and snack giant's fiscal second-quarter profit and revenue beat expectations - but didn't prompt an increase in the full-year outlook.

And while the international business showed strong growth, the North America volume in the snacks business was flat despite a second consecutive quarter of price cuts - and the beverages business remained a problem.

CEO Ramon Laguarta said in prepared management remarks about the results that although the convenient foods business gained market share, performance in both the snacks and beverages businesses moderated due to "consumer budgets tightening due to rising inflationary pressures." Basically, lowering prices for certain snacks wasn't enough to trigger more spending.

The stock (PEP) sank 4.1% in recent morning trading, which puts it on track for the biggest one-day drop since it shed 4.9% on April 24, 2025. That selloff appeared to impact shares of rival Coca-Cola (KO), which fell 1.4%.

Revenue for the PepsiCo Foods North America business in the quarter to June 13 declined 2% from a year ago, as volume was flat and prices fell 2% - prices had declined 1% in the previous quarter.

For PepsiCo Beverages North America, revenue grew 7%, but the acquisition of businesses in 2025 provided a boost. Prices increased 3% - they rose 6% the previous quarter - but volume fell 4% to extend a streak of quarterly volume declines going back to the fiscal third quarter of 2022.

On thing the company told analysts, according to an AlphaSense transcript, that it has been working on over the past few months is to try to get more people who go to gas stations to impulsively buy more beverages and foods. What should help is that the "hopefully" higher gas prices will be less of an issue in the second half of the year.

Meanwhile, overall revenue grew 6.4% to $24.18 billion, above the average analyst estimate compiled by FactSet of $23.95 billion. That was helped by double-digit percentage growth in each of its international regions. That pushed overall volume growth to 3%, while pricing rose 2%.

Gross margin, a measure of profitability on sales, narrowed to 54.2% from 54.7%.

Core earnings per share, which excludes nonrecurring items, rose to $2.20 from $2.12 a year ago and topped the FactSet EPS consensus of $2.19.

Despite the beats, the company said it still expects 2026 organic revenue, which excludes acquisitions, to increase between 2% and 4% and core EPS to rise between 4% and 6%.

PepsiCo's stock has lost 4.7% in 2026, while Coca-Cola shares have rallied 17.7% and the S&P 500 index SPX has gained 9.7%.

-Tomi Kilgore

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07-09-26 1058ET