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Miami Herald
2 days ago
- Business
- Miami Herald
PepsiCo struggles to reverse concerning customer behavior
PepsiCo (PEP) , which owns popular food and drink brands such as Pepsi, Lay's, Gatorade, Quaker, Tostitos, and more, continues to suffer from a dramatic change in customer behavior, and it is making bold moves to address the problem. In PepsiCo's second-quarter earnings report for 2025, it revealed that U.S. revenue from its food brands declined by 2% year-over-year. Its convenient foods volume in the U.S. also dipped by 1%, while its beverages volume decreased by 2%. Don't miss the move: Subscribe to TheStreet's free daily newsletter Despite low sales, the company's net revenue increased by 1% year-over-year during the quarter. Related: Kellogg sounds alarm on unexpected shift in customer behavior In the earnings report, PepsiCo CEO Ramon Laguarta said the company is "effectively navigating through a challenging environment." Image source: Bloomberg/Getty Images The decrease in sales comes during a time when consumers are watching their spending as they battle inflation and higher costs of living. During an earnings call on July 11, Laguarta acknowledged that consumers have become more value-conscious and said that going forward, PepsiCo will address affordability with "more precision." Many Americans are also shifting more toward healthier food and beverage options as concerns over potential health risks associated with ingredients found in processed foods continue to erupt on social media, which is also impacting sales. Amid this challenge, PepsiCo is making a huge effort to attract health-conscious consumers, which it hopes will help fix its struggling sales. Part of this effort includes gradually removing artificial colors and artificial flavors from its food and beverages. "We're following the consumer, and if the consumer is telling us that they prefer products that have sugar, and they prefer products that have natural ingredients, we will give the consumer products that have sugar and have natural ingredients," said Laguarta during the call. Related: PepsiCo makes swift move to avoid major boycott from consumers As part of this initiative, PepsiCo plans to soon "introduce extensions of Cheetos and Doritos" that will contain no artificial colors or flavors. The company is also relaunching its Lay's and Tostitos brands to "elevate" their healthy ingredients and remove artificial ingredients from their products, starting during the fourth quarter of this year and the first quarter of next year. In addition, PepsiCo is also decreasing its reliance on seed oils in its food products. These oils have recently faced scrutiny from consumers on social media for being overly processed and contributing to inflammation in the human body. "We will expand the use of avocado or olive oil across certain brand platforms and enhance certain products with protein, fiber, and whole grains later this year and into next year within our Frito-Lay and Quaker portfolios," said Laguarta and PepsiCo Chief Financial Officer Jamie Caulfield in prepared remarks. The company will also focus on providing smaller portions of its food products to consumers by increasing multipack, variety pack, and single-serve options. It also plans to join the growing protein trend, in which consumers are focused on implementing more protein into their diets to improve health and wellness. "I think protein is clearly a sub-segmenting in our food and beverages categories that is growing fast, consumers are adopting protein solutions in the diets at a pace that was not the case a few months back, a few years back," said Laguarta. "So as we always do, we follow the consumer." The increased focus on healthier food options comes after a survey by the International Food Information Council last year found that 79% of Americans consider whether a food product is processed when deciding to purchase it. Also, 63% of Americans avoid processed foods, while over half follow a vegan, vegetarian, or plant-based diet to be healthier. More Food + Dining: Papa Johns makes major menu change to win back customersSteak 'n Shake's beef tallow fries aren't as healthy as they appearChick-fil-A angers customers with major change in stores Amid this trend, PepsiCo has acquired brands Siete Foods and Poppi, which both recently gained traction among consumers for their healthy ingredients. U.S. Secretary of Health and Human Services Robert F. Kennedy Jr. has also been pressuring food companies to remove processed ingredients from their products. Recently, he announced his goal to phase out synthetic dyes in food and beverages, which has prompted some food companies to alter their ingredients. "For too long, some food producers have been feeding Americans petroleum-based chemicals without their knowledge or consent," said Kennedy in an April press release. "These poisonous compounds offer no nutritional benefit and pose real, measurable dangers to our children's health and development. That era is coming to an end." Related: Coca-Cola may soon make a drastic change to its sodas The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
3 days ago
- Business
- Yahoo
PepsiCo moves toward North America 'integration' in productivity drive
PepsiCo is seeking to boost its productivity by 'integrating' its two-largest businesses in North America, snacks and drinks. That was one of the key messages to emerge from chairman and CEO Ramon Laguarta's second-quarter results presentation yesterday (17 July) as he outlined an expected 'sequential improvement' in PepsiCo's revenue and market share through the rest of the 2025 financial year. 'One North America will modernise our company and improve our agility and marketplace competitiveness over time,' Laguarta said in his prepared remarks. Laguarta implied the integration will include PepsiCo's Frito-Lay North America reporting and operating division, along with PepsiCo Beverages North America (PBNA), each with revenues in 2024 of $24.8bn and $27.8bn, respectively. It was not clear if Quaker Foods North America, which posted sales last year of $2.7bn, will also feature in the amalgamation but it seems likely judging by the CEO's follow-up comments to analysts' questions. 'When it comes to the North America market, we have one new layer of opportunity that is going to give us a lot of opportunities to improve our cost structure over the next three, four years, which is the North America integration. 'We have two large businesses, almost $30 billion each that have been operating almost a full value chain side by side. Now, with the investments we've made in technology, with the new data that we have in systems, we're going to start looking at those businesses in a more integrated way to perform some of the value chain tasks in an integrated way.' Laguarta highlights synergies The finer details of the workings of that plan have yet to emerge - whether PepsiCo will consolidate its North America business units into one standalone division or still have separate reporting divisions. Integration would 'create both efficiency and cost reduction, but also growth opportunities for the business in a combined way', Laguarta added. He used another adjective, 'synergise', in terms of 'two large operating businesses that are sitting side-by-side servicing the same geographies, the same customers and then the same consumers'. Laguarta explained further: 'That, for us, is a huge idea to optimise how we do most of the task in our value chain, how we do this at low cost and a better performance. 'This will be our priority and where we will focus our efforts for the next three, four years to capture value and come out of this as a lower-cost business and better-performing business.' The PepsiCo chief also outlined historical and ongoing efforts to boost productivity 'enabled by automation, standardisation, and increased use of digital tools and data analytics', which, Laguarta said, 'will provide continuous, ongoing support for our necessary operational investments and commercial activities'. They also include AI. Savings from those productivity initiatives will be 'used primarily to invest in capabilities that accelerate growth and improve profitability', he said. PepsiCo's international division (40% of the company's 2024 group revenue of $91.8bn) was outlined as a key driver of revenue growth at the first-quarter results stage in April. That remains the case but foodservice is also now seen as a major growth opportunity, with innovation at the heart of both the out-of-home and retail push. Laguarta slipped in the planned 'big push' into protein beverages, with no 'artificials', to complement its no-sugar and functional drinks. And also so-called permissible snacks in the health space, including simple ingredient Frito-Lay and Tostitos brands that too will have no 'artificials'. The protein-drinks launch is slated for the final quarter or into the first three months of the next fiscal year, Laguarta suggested, adding: 'We will be participating in the liquid-protein space with, I think, superior propositions that have no artificials, that are great tasting, and that I think will give us the return on what is clearly a consumer trend that is scaling up in the US and it's part of the repertoire of our consumers'. Finance chief Jamie Caulfield said PepsiCo expects to deliver 70% more productivity savings in the second half than in the first six months across the group, much of which will be centred on Frito Lay because of the 'need to right-size the assets and some of the other fixed costs'. 'We're pushing on every cost lever that is available and that's what's going to drive the incremental productivity in the second half,' Caulfield said. "PepsiCo moves toward North America 'integration' in productivity drive" was originally created and published by Just Drinks, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yomiuri Shimbun
3 days ago
- Business
- Yomiuri Shimbun
Pepsico Overcomes Lagging US Sales in a Strong Second Quarter
PepsiCo reported better-than-expected earnings and revenue in the second quarter and expressed confidence that new and revamped products can boost its lagging North American sales in the second half of this year. In a conference call with investors Thursday, PepsiCo Chairman and CEO Ramon Laguarta said the company plans to introduce protein-enhanced versions of snacks like Pop Corners in the next few months and will eventually make high-protein versions of some of its biggest sellers. Protein beverages are also going on sale later this year. 'Consumers are adopting protein solutions in their diets at a pace that was not the case in a few years back,' Laguarta said. 'We can provide democratized solutions at large scale. That's what we're trying to do.' Laguarta said a relaunch of Lay's potato chips and Tostitos tortilla chips without artificial colors or ingredients is also coming later this year. PepsiCo said in April that it was accelerating a planned phase-out of artificial colors and ingredients after U.S. health officials called on companies to make that shift. But Laguarta didn't say whether PepsiCo is planning a shift to real sugar in its U.S. sodas. Late Wednesday, President Donald Trump said in a social media post that Coca-Cola had agreed to use real cane sugar in its flagship product in the U.S. instead of high-fructose corn syrup. Coke didn't confirm the change but promised new offerings would be shared soon. 'If the consumer is telling us that they prefer products that have sugar and they prefer products that have natural ingredients, we will give the consumer products that have sugar and have natural ingredients,' Laguarta said. 'So this is a journey of following the consumer, trying to be maybe one step ahead of the consumer but not too many steps.' Sales of Frito-Lay and other snacks fell 1% in North America during the April-June period, PepsiCo said Thursday, while beverage sales slid 2% in the region. Years of double-digit price increases from PepsiCo and changing consumer preferences has weakened demand for the company's drinks and snacks, the company said in February. It said Thursday that it's trying to combat perceptions that its products are too expensive by expanding distribution of value brands like Chester's and Santitas. Sales rose in some other regions, including Latin America and Asia. PepsiCo said low- or no-sugar versions of its trademark Pepsi saw strong sales globally. Revenue rose less than 1% to $22.7 billion in the April-June period. That was higher than the $22.3 billion Wall Street forecast, according to analysts polled by FactSet. PepsiCo's net income fell 59% to $1.3 billion. Adjusted for one-time items, including impairment charges related to its Rockstar and Be & Cheery brands, PepsiCo earned $2.12 per share. That was also higher than the $2.03 analysts had forecast. PepsiCo shares rose nearly 6% in morning trading Thursday. PepsiCo lowered its full-year earnings expectations in April, citing increased costs from tariffs and a pullback in consumer spending. The company reaffirmed that guidance Thursday.
Yahoo
4 days ago
- Business
- Yahoo
PepsiCo to rebrand Lay's, Tostitos without artificial dyes, flavors
By Jessica DiNapoli and Juveria Tabassum (Reuters) -PepsiCo is planning to highlight what will no longer be in its potato or tortilla chips - artificial colors or flavors - when it re-launches its Lay's and Tostitos brands later this year, executives said on Thursday. The overhaul for the company's top-selling snack brands comes as U.S. Health Secretary Robert F. Kennedy Jr. pushes Americans to eat "whole foods" and pressures manufacturers to ditch dyes. U.S. food makers have been announcing plans to remove dyes from their products and introduce new ones without the colors under pressure from Kennedy and the Make America Healthy Again (MAHA) social movement backing him. "We're trying to elevate the real food perception of Lay's. If you think about the simplest and most natural snack, it is a potato chip; it's a potato, it's oil, and it's a little bit of salt—the most simple, no artificial ingredients," said CEO Ramon Laguarta in a call with investors. The company also said it was expanding use of avocado and olive oil across its brands, rather than the canola or soybean oil it uses. The MAHA movement has questioned the health benefits of certain food oils. In April, PepsiCo said it planned to migrate its entire portfolio to natural colors, or give consumers the option to have a product without a synthetic dye. Its Cheetos snacks and Gatorade drinks rely on synthetic dyes for their bright hues. It already offers Lay's and Doritos without artificial colors or flavors under its Simply segment. 'The Simply line extension for existing chip brands is still in early innings - consumers have not engaged so far, and given that, it will be seen how consumers react to a rebranding of Lay's and Tostitos over the next couple of quarters,' said Christian Greiner, F/m Investments senior portfolio manager. COSTLY PREMIUM PRODUCTS? The soda pop maker also said on Thursday it would use sugar in its products like Pepsi beverages if consumers want it. On Wednesday, President Donald Trump said Coca-Cola will start using cane sugar in its beverages in the U.S., a dietary preference of Kennedy's MAHA movement. Both Pepsi and Coke use high-fructose corn syrup for their sodas, which is generally more cost-effective. The moves come at a time when packaged food companies like PepsiCo are seeing consumers reel in their spending after the industry raised prices over the years since the COVID-19 pandemic to shield their margins. PepsiCo has been offering more products at lower price points and smaller pack sizes in its food segment to meet the demand for affordable snacks. "While there is clearly demand for cleaner ingredients in food and beverage products, it remains to be seen if consumers will be willing to pay up for these more premium products, especially in today's inflationary environment and more price-sensitive consumer base," said Arun Sundaram, analyst at CFRA Research. Laguarta also said on Thursday the company would be entering the "liquid protein" space, as protein shakes grow increasingly popular. He also said the company would be adding protein options to its popcorn brand PopCorners and Quaker snacks. Solve the daily Crossword
Newsweek
4 days ago
- Business
- Newsweek
Pepsi Weighs In After Trump Says Rival Coke Will Use Cane Sugar
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Pepsi is promising to deliver want customers want – with or without high fructose corn syrup. PepsiCo chairman and CEO Ramon Laguarta told investors the beverage giant plans to follow the tastebuds of customers during a fortuitously timed earnings call Thursday, one day after President Donald Trump said the company's rival, Coca-Cola, agreed to switch using to cane sugar in Coke manufactured in the United States. "Listen, same journey that we have in foods, we're following in beverages," Laguarta said on the call when asked about Trump's comments. "This is a consumer-centric strategy. We're following the consumer. If the consumer is telling us that they prefer products that have sugar and they prefer products that have natural ingredients, we will give the consumer products that have sugar and have natural ingredients." Pepsi CEO Ramon Laguarta, right, with NFL commissioner Roger Goodell prior to an NFL football game between the New York Giants and the Chicago Bears on Dec. 2, 2018, in East Rutherford, N.J. Pepsi CEO Ramon Laguarta, right, with NFL commissioner Roger Goodell prior to an NFL football game between the New York Giants and the Chicago Bears on Dec. 2, 2018, in East Rutherford, N.J. AP Photo/Bill Kostroun PepsiCo aims to aims to follow the public's lead, trying to be a "little bit maybe one step ahead of the consumer, but not too many steps," said Laguarta, who has led the food and beverage company since 2018. "And it applies to both beverages and food," he continued. "In particular, we have a journey to – and a technical roadmap – to eliminate artificial colors and artificial flavors from our beverages the same as we do for our food business, and we'll be able to execute as the regulations evolve, or consumer preference evolve." Trump said in a post on Truth Social Wednesday that Coca-Cola had agreed to use real cane sugar in U.S production instead of high-fructose corn syrup, but the company did not immediately confirm the switch. "I have been speaking to Coca-Cola about using REAL Cane Sugar in Coke in the United States, and they have agreed to do so," Trump wrote. "I'd like to thank all of those in authority at Coca-Cola. This will be a very good move by them — You'll see. It's just better!" President Donald Trump drinks a Diet Coke during the ProAm of the LIV Golf Team Championship at Trump National Doral Golf Club, Thursday, Oct. 27, 2022, in Doral, Fla. President Donald Trump drinks a Diet Coke during the ProAm of the LIV Golf Team Championship at Trump National Doral Golf Club, Thursday, Oct. 27, 2022, in Doral, Fla. AP Coca-Cola, which said it plans to share details of new products soon, currently uses cane sugar in beverages sold in other countries, such as Mexico and Australia. "We appreciate President Trump's enthusiasm for our iconic Coca‑Cola brand," the company told Newsweek in a statement Wednesday. "More details on new innovative offerings within our Coca‑Cola product range will be shared soon." Trump, meanwhile, is vocal proponent of Diet Coke, which uses aspartame, a low-calorie artificial sweetener. Health and Human Services Secretary Robert F. Kennedy wants food companies to reformulate some products by eliminating ingredients such as artificial dyes. A report released in May by Make America Health Again (MAHA) Commission determined that significant consumption of high-fructose corn syrup could contribute to childhood obesity and other health concerns, findings that have been know by researchers for at least 20 years.
