PepsiCo fell short of second-quarter revenue expectations due to price hikes and increased competition from private-label brands, impacting sales in its largest market, the United States. Despite a 5% increase in average product prices for the quarter ending June 15, overall organic volumes decreased by 3%. Company executives noted that consumers have become more value-conscious, affecting sales across various food categories, including snacks.
PepsiCo CEO Ramon Laguarta highlighted the growing price sensitivity among consumers, which has led the company to focus on improving efficiency and stepping up productivity rather than continuing to raise prices. To cater to diverse consumer preferences, PepsiCo is introducing new flavors for its brands like Lay’s, Doritos, and Cheetos, and offering products across different price tiers. However, these efforts come as the company grapples with shrinking volumes in key segments.
Frito-Lay North America, PepsiCo’s second-largest business, saw a 4% decline in volumes, while the North America beverages division experienced a 3.5% drop. Following the revenue miss, PepsiCo’s shares fell by as much as 3.4% to a nine-month low of $158.03. The company also adjusted its fiscal 2024 organic revenue growth expectations to about 4%, down from the previous forecast of at least 4%.
