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PepsiCo says it is planning to optimize its ad spend and reduce SKUs amid declining volumes in North America.
On Thursday, PepsiCo reported $2.6 billion USD in third-quarter net income attributable to the company, down from $2.9 billion USD from the same period in 2024.
CEO Ramon Laguarta said the company is operating in a “subdued environment” for food CPGs as consumer budgets remain constrained. In coming quarters, PepsiCo will be prioritizing accelerated growth and the aggressive optimization of its cost structure.
The plan will, in part, mean optimizing advertising and marketing spend to drive greater ROI and reducing SKUs to simplify the supply chain and drive focus on in-market execution. Since 2022, the company has reduced more than 35% of its SKU count.
Laguarta said that for PepsiCo’s food business, affordability, permissibility and functionality continue to play a role in how consumers are defining value.
The removal of artificial colours and flavours and a focus on simpler ingredients, including additional protein, fiber and whole grains, are among the plans to accelerate organic revenue in core offerings.
Laguarta noted the trend toward protein in product innovation, pointing to Starbucks, Quaker and other companies that are infusing wellness ingredients into their products. She added that she believes “fibre is the next protein.”
PepsiCo’s North American beverage business reported 2% organic revenue growth in the quarter.
Volume and net-revenue growth increased for trademark Pepsi products, driven by strong performance by Pepsi Zero Sugar.
According to Laguarta, Pepsi’s relaunch has “been a success” since the company began “investing a bit more in the brand, from a marketing point of view.”
Mountain Dew in-market share trends improved versus the previous quarter as flavour extensions have helped reignite interest from consumers.
Prebiotic soda Poppi delivered “strong results” with year-to-date estimated retail sales of $525 million USD, an increase of more than 50% compared with 2024.
Finally, the company also announced a transfer of ownership of the Rockstar Energy brand in the U.S. and Canada to Celsius Holdings in a deal worth more than $500 million USD.
