PepsiCo’s second-quarter revenue fell short of expectations as slowing demand for snacks and sodas, coupled with ongoing price hikes, impacted sales primarily in the United States, its largest market.
Analysts have noted that while product prices are starting to normalize after nearly two years of multiple increases, they remain higher than pre-pandemic levels. This leaves packaged-food companies like PepsiCo with limited room to raise prices further as volumes shrink.
For the quarter ended June 15, PepsiCo raised average product prices by 5%, consistent with the first quarter. However, overall organic volumes slipped by 3%.
Sales at Frito-Lay North America, PepsiCo’s snacking division that includes popular brands like Lay’s and Doritos, fell nearly 1.3% in the four weeks ended June 15, according to data from NielsenIQ. The overall salty snacks category in the U.S. saw a smaller decline of 0.7%.
Frito-Lay North America, which contributed about 27% to PepsiCo’s total revenue in fiscal 2023, is the company’s second-largest business after its North America beverages unit, which accounted for about 30% of overall sales.