PURCHASE, New York: PepsiCo has revised its sales forecast downward for the year, citing weaker demand in major markets like the U.S. and China.
The company, headquartered in Purchase, New York, now anticipates its organic revenue to rise in the low single digits, down from its previous projection of a four percent increase. Organic revenue excludes the effects of foreign exchange rates and acquisitions or divestments.
In the first three quarters of 2024, PepsiCo’s organic revenue rose by 1.9 percent. However, the company noted that its performance in North America was “subdued,” largely due to a significant recall of Quaker Oats granola bars and cereals, as well as sluggish demand for Frito-Lay snacks and beverages.
Consumers have started to push back against price increases, which PepsiCo and other companies have implemented in recent years. These hikes have drawn attention from lawmakers, with Senator Elizabeth Warren and Representative Madeleine Dean recently accusing PepsiCo and other major food companies of price gouging by reducing package sizes while raising prices.
To address consumer concerns, PepsiCo Chairman and CEO Ramon Laguarta said the company made efforts in the third quarter to make its Lay’s brand more affordable. Initiatives included product promotions, increasing the quantity of chips per bag, and offering value packs. As a result, Lay’s gained market share, and the company plans to apply similar strategies to its Doritos and Tostitos brands.
Despite these efforts, Frito-Lay’s North American sales volumes dipped by 1.5 percent in the third quarter, though this was an improvement from the four percent drop in the previous quarter. North American beverage sales also declined, falling by three percent.
Globally, PepsiCo raised prices by three percent in the third quarter, while sales volumes fell by two percent. The company saw strong growth in markets like India and Brazil, though spending slowed in China, Mexico, and parts of Europe.
PepsiCo’s third-quarter revenue remained flat at US$23.3 billion, falling short of analysts’ expectations of $23.8 billion. Net income dropped by five percent to $2.9 billion, or $2.13 per share, though adjusted earnings per share of $2.31 beat analysts’ estimates of $2.29.
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