Mixed results
Business performance
PepsiCo’s business was impacted by weak category performance in North America, the effects of a recall in the Quaker Foods North America division, and geopolitical tensions in certain international markets.
In North America, the Frito-Lay division was impacted by softness in salty and savory snacks while the Quaker Foods division was hurt by the effects of the recall. Inflationary pressures on consumer budgets, growth in away-from-home dining, and tough growth comparisons to previous years took a toll on the snacks business.
In the coming year, PepsiCo plans to expand its offerings in the Frito-Lay business by relaunching its Simply product lineup that has no artificial flavors or colors, and through its Siete and Sabra brands.
The company expects to see an improvement in its Quaker Foods division in 2025 as it laps the effects of the recall. It remains focused on building and expanding its offerings in oatmeal, snack bars and lite snacks to drive growth in this business.
Within the North America Beverages business, PEP is focusing its resources on segments such as zero sugar, functional hydration, and sports nutrition, which cater to health-conscious customers and have potential for profitable growth.
In Q4, within the international business, convenient foods delivered organic revenue growth of 4% while beverages saw organic revenues grow 13%. This led to a total organic revenue growth of 6% for this business.
Outlook
PepsiCo anticipates shifts in customer preferences depending on channel, income and geography, and plans to tailor its business strategies accordingly. It also anticipates more geopolitical uncertainty and foreign exchange volatility in 2025.
PEP expects a gradual improvement in its North America business during the year helped by its commercial activities. It also expects its international business to remain resilient despite geopolitical tensions and macroeconomic volatility in some markets.
The company expects a low-single-digit increase in organic revenue and a mid-single-digit increase in core constant currency EPS in fiscal year 2025. Core EPS is expected to see a low-single-digit increase in FY2025.