PURCHASE, NY. — PepsiCo, Inc. continued its efforts to improve sales volume in the third quarter ended Sept. 7. Volume still declined 2% when compared to the previous year’s third quarter, but investing in Lay’s led to a volume increase for that brand, and company executives expect investing in Doritos and Tostitos this fall will increase sales volume in those two brands as well.

Purchase-based PepsiCo had net income of $2.93 billion, equal to $2.13 per share on the common stock, which was down 5% from $3.09 billion, or $2.24 per share, in the previous year’s third quarter. Net revenue dipped 0.6% to $23.32 billion from $23.45 billion. Organic revenue increased 1.3%. PepsiCo changed its fiscal-year organic revenue forecast to an increase in the low single-digit percentages from a previous forecast of up 4%.

BofA maintained its “buy” rating for PepsiCo, noting the company’s organic/core EPS of $2.31 beat BofA’s forecast of $2.26, as productivity supported gross margin expansion and funded marketing investments.

“Now that remedial actions to address volume weakness are underway, the stock should behave well, if market share follows suit,” said Bryan D. Spillane, research analyst for BofA. “We believe (PepsiCo’s) premium to non-alcoholic beverage peer average of 20 times is warranted by their strengthened position and pricing power to manage through the ongoing inflationary environment.”

In Frito-Lay North America, net revenue of $5.89 billion was down 1% from $5.95 billion in the previous year’s third quarter. Volume trends in FLNA improved sequentially but were still down 1.5% for the quarter. Operating profit decreased 9% to $1.52 billion from $1.67 billion.

Sales volume for the Lay’s brand increased by mid-single-digit percentages. The brand gained market share and increased household penetration.

“We feel good about the investments that we put this summer mostly behind the potato chips category and Lay’s,” said Ramon Laguarta, chief executive officer of PepsiCo, in an Oct. 8 earnings call. “That drove growth in the potato chips business. Lay’s gained three points of household penetration, and we feel good about that return.

“Now we’re going to apply that sequentially to other categories. We will use the fall/winter season to put more investments behind Doritos and Tostitos. It’s the football season. There’s a lot of gatherings, and those brands belong very well in those gatherings.”

Laguarta was asked how the pending acquisition of Siete Foods for $1.2 billion might impact FLNA’s strategy.

“The acquisition of Siete hopefully will give us another tool to capture both permissible locations and enter into meals in a way that is sustainable in long term, but there are many other brands in the portfolio that can play in both of those spaces,” he said.

Inflationary pressures and higher borrowing costs continued to impact consumer budgets and spending patterns, according to PepsiCo. Value-conscious brands within FLNA delivered net revenue growth with Chester’s up by double-digit percentages and Santitas up by mid-single-digit percentages.

“If we think about the long-term growth potential of the food business in the in the US, we are very positive about the long-term trends,” Laguarta said. “We’ve seen Gen Z snacking patterns and food patterns being in a way that favor the growth of our category. They’re snacking more. They’re eating mini meals versus large meals, and that favors our brands and the number of occasions that they carry will grow. So long term, we feel very good about it.”

In Quaker Foods North America, negative impacts from the Quaker recall continued, although they were diminishing, according to PepsiCo. Net revenue dropped 13% to $648 million from $747 million in the previous year’s third quarter. Sales volume fell 13%. Operating profit of $97 million was down 28% from $135 million.

In PepsiCo Beverages North America, net revenue of $7.18 billion was up slightly from $7.16 billion in the previous year’s third quarter. Volume was down 3%, and operating profit declined 6% to $914 million from $970 million. Large brands such as Gatorade delivered net revenue growth in mid-single-digit percentages. Pepsi, buoyed by Pepsi Zero Sugar, delivered net revenue growth. Propel had net revenue growth in mid-single-digit percentages, and bubbly was in the single-digits.