Pepsi is losing its fizz.
Sales volumes in PepsiCo’s North American soft drinks business fell 2% during the company’s third quarter, it said on Thursday. The company also cut its sales growth forecast for the fourth quarter.
“We do not feel good about the beverage business,” CEO Ramon Laguarta said on the company’s earnings call.
The soda slowdown is the latest indication that many consumers are spending more carefully. US consumer sentiment recently dipped below pandemic levels as wages have failed to keep up with inflation. Rising interest rates could end up stretching consumers even more.
The consumer pullback showed up in PepsiCo’s results. CEO Laguarta said that shoppers and diners are “clearly challenged,” a fact that is also affecting sales of snacks such as Cheetos and Siete chips. Many shoppers will likely continue looking for value and affordable price points, he said.
“We don’t expect the consumer to suddenly become much more in a much better place in the next 12, 18 months,” Laguarta said.
PepsiCo said last month that it would raise prices on its chips and soda later this year and in early 2027. The increases come after the company cut prices by up to 15% on products including Lay’s and Doritos.
While some products, such as energy drinks, are still selling well, many of PepsiCo’s sodas were a weak point during the quarter, Laguarta said. “We’re putting all the urgency of the business and the focus on improving our performance in soft drinks,” he said.
PepsiCo is looking to cut costs and invest the savings into its beverage and snacks business in North America, Laguarta added. Shares of the company were up 0.9% on Thursday.
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