PepsiCo cuts revenue forecast amid US consumer pullback
- PepsiCo has revised its organic revenue forecast for the year, expecting a low single-digit increase instead of 4%.
- The decline in demand is linked to a recall of Quaker Oats products and consumer pushback against price increases.
- The company's third quarter revenue was flat at $23.3 billion, resulting in a 1% drop in shares.
In the United States, PepsiCo has revised its organic revenue forecast for the year due to a decline in consumer demand for its snacks and beverages. The company, headquartered in Purchase, New York, announced on Tuesday that it now anticipates a low single-digit increase in organic revenue, down from an earlier expectation of 4%. This adjustment comes after a disappointing performance in North America, where sales volumes for Frito-Lay snacks dropped by 1.5% and beverage volumes fell by 3%. The decline in demand has been attributed to several factors, including a significant recall of Quaker Oats granola bars and cereals, which negatively impacted sales. Additionally, consumers have started to resist price increases that have been implemented over the past few years, prompting PepsiCo to commit to lowering prices on certain products, such as potato chips and tortilla chips. In the third quarter, PepsiCo reported flat revenue of $23.3 billion, falling short of Wall Street's expectations of $23.8 billion. The company's net income also decreased by 5% to $2.9 billion, or $2.13 per share, which was below analyst forecasts of $2.28 per share. As a result of these disappointing financial results and forecasts, PepsiCo shares experienced a 1% decline in premarket trading. The overall subdued performance in North America highlights the challenges the company faces in maintaining growth amid changing consumer behaviors and economic pressures.