Focus at PepsiCo turns to increasing snack sales

PURCHASE, NY.  — PepsiCo, Inc. executives plan to boost sales in its Frito-Lay North America (FLNA) business unit through price-pack architecture and increased offerings in the away-from-home category.

Operating profit declined in all three North American business units – FLNA, Quaker Foods North America and PepsiCo Beverages North America – in the fiscal year ended Dec. 28, 2024. PepsiCo net income of $9.58 billion, or $6.95 per share on the common stock, was up 6% from $9.07 billion, or $6.56 per share, in the previous fiscal year. Net revenue in the year rose 0.4% to $91.85 billion from $91.47 billion. PepsiCo’s stock price on Feb. 4, the day financial results were given, closed at $143.9 per share on the Nasdaq, which marked a 4.5% decline from a Feb. 3 close of $150.27 per share.

In FLNA, operating profit declined 7% to $6.32 billion from $6.76 billion, primarily reflecting certain operating cost increases and a decrease in organic volume. Net revenue decreased 0.6% to $24.76 billion from $24.91 billion.

Two recent acquisitions give FLNA better access to the away-from-home category, said Ramon Laguarta, chief executive officer of PepsiCo, in a Feb. 4 earnings call.

“Now we're dialing up the opportunity to have our products available away from home, but not only in the form of a conventional bag of our snacks but also more, elevated experiences in the form of ready-to-eat-almost solutions or mini-meal solutions,” he said. “That's why the acquisitions of Siete and Sabra feed our strategy as they give us not only better-for-you snacks but also the option to participate in meals and mini meals in a much more intentional way.”

Innovations in packaging, including single-serve packs and multipacks, will be designed for consumers interested in portion control and value.

“We're trying to create solutions for consumers in those moments of the day where they’re looking for a 200 calorie, 300 calorie solution that takes them over for the next few hours into their next job or whatever they’re trying to accomplish,” Laguarta said.

He added FLNA will emphasize items that are baked, lightly salted and have no artificial ingredients.

Lowering prices is not an option for now.

“I don’t think we will have negative pricing,” Laguarta said. “We’ll have a much more surgical price-pack strategy and execution strategy that we think will drive growth for the category.”

In PepsiCo Beverages North America, operating profit decreased 11% to $2.30 billion from $2.58 billion in the previous fiscal year, primarily driven by certain operating cost increases, a decline in organic volume, an impact of 9 percentage points from higher impairment and other charges associated with an investment and juice-transaction-related receivables, and an impact of 7 percentages points from higher restructuring charges and higher advertising and marketing expenses. Net revenue increased 0.5% to $27.77 billion from $27.63 billion.

The Pepsi Zero Sugar and Propel brands had net revenue growth of double-digit percentages in the fiscal year. Gatorade gained market share.

Laguarta, in the earnings call, was asked if GLP-1 weight-management medications might impact PepsiCo.

“At this point, we see that because of the lower levels of adoption and people coming in and out of the treatment, we see very little impact in our business and in our category at this point,” he said, adding that PepsiCo’s protein beverages like Muscle Milk might appeal to consumers on GLP-1 medication.

GLP-1 medications also might impact Quaker Foods North America products favorably.

“If you look at Quaker today, we’ve got a number of offerings that are high protein in the breakfast occasion, and I think there’s a lot more opportunity to expand that,” said James Caulfield, chief financial officer.

Operating profit for QFNA in the fiscal year decreased 38% to $303 million from $492 million, primarily reflecting a decrease in volume, certain operating cost increases and an impact of 14 percentage points from charges associated with a Quaker recall. Net revenue decreased 14% to $2.68 billion from $3.10 billion.

The Quaker recall at a plant in Danville, Ill., occurred in December 2023. The decision to close the plant permanently was made in April 2024. PepsiCo expects Quaker’s net performance to improve gradually in 2025 as the company laps the impacts of the recall.

In the fourth quarter companywide, PepsiCo had net income of $1.52 billion, or $1.11 per share on the common stock, which was up 17% from $1.30 billion, or 94¢ per share, in the same time of the previous year. Fourth-quarter net revenue decreased 0.2%to $27.78 billion from $27.85 billion.

PepsiCo in the current fiscal year expects to deliver organic revenue growth in the low-single-digit percentages and core constant currency growth in EPS in the mid-single-digit percentages.