**PepsiCo Reports Slight Revenue Decline in Fourth Quarter Amid Consumer Pullback**
PepsiCo experienced a minor decline in revenue during the fourth quarter as North American consumers reduced their purchases of Frito-Lay snacks and beverages. The Purchase, New York-based company announced a revenue of $27.78 billion for the October-December period, falling short of Wall Street’s expectations of $27.89 billion, as reported by analysts from FactSet. Consequently, PepsiCo’s shares dropped by 2.6% in premarket trading.
Last fall, PepsiCo cautioned about “subdued” demand in North America, which was partly attributed to a significant recall of Quaker Oats granola bars and cereals. Additionally, consumers have been opting for fewer snacks or switching to more affordable brands following years of price hikes. The company noted a 3% increase in net pricing globally during the fourth quarter.
To address these challenges, PepsiCo has been striving to make its snacks more budget-friendly by introducing product promotions, increasing the quantity of chips per bag, and offering mini canisters and value packs. The company is also expanding its Chester’s and Santitas value brands, which saw notable revenue growth last year. On the beverage front, PepsiCo increased its marketing expenditures, concentrating on successful products like Pepsi Zero Sugar, Propel, and Gatorade.
Globally, PepsiCo’s snack food and beverage volumes rose by 1% in the fourth quarter, with significant growth observed in Africa and Asia. However, sales in North America for both snack foods and beverages declined by 3%. Net income for the quarter increased by 17% to $1.5 billion. After adjusting for one-time items, PepsiCo reported earnings of $1.96 per share, surpassing analysts’ forecasts by two cents.
Looking ahead, PepsiCo anticipates organic revenue growth in the low single digits for 2025. Organic revenue is adjusted for foreign currency fluctuations and the effects of product acquisitions or divestments. The company reported a 2% organic revenue growth for 2024. Following the closure of four U.S. bottling plants in October, PepsiCo plans to continue its multi-year initiative to enhance productivity, which includes increasing automation in its plants and warehouses.
