PepsiCo has revised its 2024 sales growth forecast, citing reduced consumer spending on snacks and sodas in North America. As inflation and higher borrowing costs persist, shoppers are shifting towards cheaper private-label brands, impacting the beverage giant’s performance.
PepsiCo now anticipates a low single-digit growth in organic sales for fiscal 2024, down from its previous 4% forecast. CEO Ramon Laguarta attributed the adjustment to ongoing inflationary pressures and tight household budgets, which have led to smaller portion purchases and more visits to mass retailers instead of convenience stores.
The company also reported a surprise decline in third-quarter revenue, in part due to a recall of Quaker Foods products over concerns of salmonella contamination. This impacted organic revenue in the Quaker Foods North America segment, which fell 13%, following an 18% drop in the second quarter.
While international markets in Latin America, South Asia, and Europe had previously offset some of the weaknesses in North America, PepsiCo is now facing volume slowdowns in these regions as well, driven by geopolitical tensions and macroeconomic challenges.
Despite the setbacks, PepsiCo’s efficiency measures helped grow margins by 111 basis points. Adjusted earnings of $2.31 per share beat estimates of $2.29, and the company maintained its annual adjusted profit forecast. However, net revenue for the quarter ended September 7 dipped 0.6% to $23.32 billion, missing analyst expectations of $23.76 billion.