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Consumer Staples · Earnings · PepsiCo · Price Cuts
PepsiCo's first-quarter revenue surged 8.5% to $19.44 billion, beating Wall Street forecasts, and net income rose 27% to $2.33 billion, as strategic price reductions and new product introductions successfully boosted demand for its snack and beverage brands.
PepsiCo's decision to lower prices and remove artificial ingredients paid off, reversing a trend where consumers had shifted to cheaper store brands after eight straight quarters of double-digit price hikes in 2022 and 2023. The company's market value had fallen by over $40 billion from 2023.
Activist investor Elliott Investment Management took a $4 billion stake in September, pressing for further price cuts, which PepsiCo accelerated late last year. In February, PepsiCo slashed U.S. prices on major chip brands like Lay’s, Doritos, Cheetos, and Tostitos by up to 15%, with a 9.25-ounce Doritos bag rolling back to $3.97 from $4.48 at a Michigan Walmart.
CEO Ramon Laguarta stated consumers are returning to their brands, responding to a "holistic value plus execution, plus advertising, plus innovation strategy." New products, including Cheetos NKD and Doritos NKD (no artificial ingredients), Smartfood FiberPop, and Doritos Protein, attracted shoppers globally. On the beverage side, the acquisition of gut health soda Poppi and a new lower-sugar, artificial-ingredient-free Gatorade version brought in new customers.
PepsiCo will also rebrand Gatorade to focus on general consumer hydration, not just athletes. Adjusted earnings per share of $1.61 also surpassed Wall Street's $1.54 forecast.
PepsiCo shares rose 2% in morning trading following the announcement, as reported by AP News.
