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PepsiCo slashes 2024 sales as US consumers tighten their belt amid high rates
- IBJ Bureau
- Oct 09, 2024
PepsiCo cut its forecast for annual sales growth on Tuesday as picky consumers in North America limit their spending on savoury snacks and sodas, while opting for cheaper private-label brands.
The packaged food giant now expects fiscal 2024 organic sales to grow in a low single-digit range. It had previously forecast a 4 per cent rise.
“The cumulative impacts of inflationary pressures and higher borrowing costs over the last few years have continued to impact consumer budgets and spending patterns,” PepsiCo CEO Ramon Laguarta said.
A rise in prices for food and other products is forcing American consumers to curtail their spending habits, opt for smaller packages and portions and shop more at mass retailers than at convenience stores, which typically account for a bigger portion of PepsiCo's beverage sales.
“The company has not been immune from overall category pressure facing most consumer staples companies,” RBC Capital Markets analyst Nik Modi wrote in a note.
PepsiCo also posted a surprise drop in third-quarter revenue, hurt in part from the recall of Quaker Foods products owing to concerns around a salmonella contamination earlier this year.
Its international markets of Latin America, South Asia and Europe, which had till now helped weakness in its North America PepsiCo business, are witnessing a slowdown in volumes.
“Pockets of elevated geopolitical tension and macroeconomic pressure are also expected to persist in certain international markets,” Mr Laguarta said.
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