Not the Pop People Were Expecting: PepsiCo (PEP) Cites Consumer Softening, Lowers 2024 Revenue Guidance

Today PepsiCo, Inc. (PEP) reported its third quarter results marking one of the first announcements of earnings season. The company beat on core EPS of $2.31 vs FactSet $2.29 but came in short on revenues $23.3 vs FactSet $23.9. Furthermore, the cola creator cut its 2024 guidance as it lowered its annual revenue outlook to a low single digit increase in organic revenue growth from the previously expected 4%.

Pepsi cited a weaker consumer demand for its snacks and drinks this quarter as shoppers have become more cautious and are snacking less. Additionally, another factor impacting sales was recalls related to its Quaker Foods North American business, which was reported the largest drop-off in volume, declining 13%.

Pepsi hopes to expand its portfolio to more health-conscious foods with its recent $1.2Bn purchase of Siete Foods which focuses on Mexican American foods and caters to those with dietary restrictions. The company also looks to capitalize on the upcoming football season with the Frito-Lay business offering bonus packs for Doritos/Tostitos. Lays is opening up its variety to become more multi-tier with unsalted, flavored and premium options as well which as seemed to capture the attention of Gen-Zers.

Overall, management seems to believe this is an economic cycle impact that will reverse once consumers feel better.