PepsiCo bets on healthier products as inflation squeezes consumers; Q2 revenue tops estimates

PepsiCo reported better-than-expected second-quarter revenue on Thursday, with strong demand for health-focused products such as prebiotic sodas, zero-sugar beverages and protein-rich snacks helping offset softer food sales in North America as consumers tightened their spending.

The food and beverage giant maintained its full-year outlook despite expecting higher input cost inflation in the second half, saying tariff refunds and productivity gains should help blunt the impact.

Also Read: Consumer firms to create nearly 5,000 jobs in 2 years as India outshines global markets


Quarterly revenue rose 6.4% to $24.18 billion, topping analysts' expectations of $23.95 billion, according to LSEG data. Core earnings per share came in at $2.20, up from $2.12 a year earlier.

Shares of the company were down about 2% in premarket trading.

North America food sales fell about 2% during the quarter as PepsiCo cut prices on brands including Lay's and Doritos to win back budget-conscious shoppers, who have increasingly shifted toward lower-priced alternatives and smaller pack sizes amid persistent inflation.

"Results were tempered in the quarter as U.S. food and beverage category performance moderated with consumer budgets tightening due to rising inflationary pressures," CEO Ramon Laguarta said in prepared remarks.

Also Read: PepsiCo to invest Rs 5,700 crore in India by 2030

The company continues to see momentum in healthier offerings, with prebiotic sodas, zero-sugar drinks and protein-rich snacks emerging as key growth drivers as consumers become more selective about discretionary spending.

"Pepsi's challenge isn't building iconic brands, it's keeping them relevant," eMarketer analyst Suzy Davidkhanian told Reuters.

"Consumers are still spending, but they're becoming more intentional about where they spend, and they expect the brands they already know to evolve with them by giving them more choice," she added.

PepsiCo reiterated its fiscal 2026 guidance, forecasting organic revenue growth of 2% to 4% and core constant-currency earnings per share growth of 4% to 6%.

The company also warned that input cost inflation is likely to accelerate in the second half of the year. However, Chief Financial Officer Steve Schmitt said refund claims for tariffs paid last year, along with productivity savings, should help cushion the impact.