PepsiCo Revises Revenue Forecast Amid Weakening Consumer Demand
PepsiCo, the global beverage and snack giant, has lowered its organic revenue forecast for the year as U.S. consumers cut back on purchases of snacks and drinks. The company now predicts a low single-digit increase in organic revenue, down from its previous projection of 4%.
The revised forecast comes as PepsiCo faces subdued performance in North America, its largest market. The company’s struggles have been compounded by the recent recall of Quaker Oats granola bars and cereals, as well as weak demand for Frito-Lay snacks and drinks.
Sales volumes for Frito-Lay North America decreased by 1.5%, while North American beverage volumes saw a more significant decline of 3%. This downturn reflects a broader trend of consumer pushback against higher prices, particularly during the summer months.
In response to these challenges, PepsiCo has committed to lowering costs on certain products, with a focus on reducing prices for potato chips and tortilla chips. This strategy aims to reinvigorate consumer interest and maintain market share in a competitive landscape.
Despite these efforts, PepsiCo’s financial performance has fallen short of market expectations. Third-quarter revenue remained flat at $23.3 billion, missing Wall Street’s projected $23.8 billion. Net income decreased by 5% to $2.9 billion, or $2.13 per share, falling below analyst forecasts of $2.28 per share.
The market has reacted to this news, with PepsiCo shares declining by 1% in premarket trading. As the company navigates these challenges, investors and industry observers will be closely watching its strategies to adapt to changing consumer behaviors and economic conditions.