PepsiCo struggles with slower US volumes in Q1 2024, challenges persist in beverage business

For the first quarter of fiscal year 2024, ending March 23, PepsiCo achieved​ $2.04bn in net income, compared to $1.93bn for the same quarter last fiscal year. Also, PepsiCo saw net revenue growth of 2.3%, and earnings per share (EPS) were $1.48, growing 6% in the first quarter.

PepsiCo’s Frito-Lay North America division saw a 2% decline in volume, and Quaker Foods North America dropped 22% due to recalls in the first quarter. At the start of the year, PepsiCo expanded a previous recall of Quaker Oats​ products to include various granola and cereal bars, snack mixes and instant oatmeal due to the risk of salmonella contamination. 

Despite these challenges, PepsiCo reaffirmed its fiscal guidance for 2024, which includes a 4% increase in organic revenue and an 8% increase in core constant currency EPS. Additionally, PepsiCo expects total cash returns to shareholders of approximately $8.2bn, comprised of $7.2bn in dividends and $1bn in share repurchases.

PepsiCo is projecting strong demand for its Frito-Lay products by tapping into snacking occasion trends, Ramon Laguarta, CEO and chairman of PepsiCo, shared during an investors call.  

“Frito-Lay continues to outperform the category, and … the big opportunity for Frito-Lay is continuing to create occasions for our savory category, bringing them from other micro snacks or as snacks and meals overlap,” Laguarta said. 

PepsiCo upbeat on Gatorade and Mountain Dew, Celsius agreement amended 

PepsiCo is facing challenges to its beverage business, which saw volumes decrease by 5% in the first quarter of 2024, as competition in the energy drink and sports drink category increases.