Followed up on pricing reinvestment, particularly a reported 15% reduction in some PFNA items, and asked about tools to mitigate this in H1, as well as the volume trajectory for PBNA and overall guidance cadence.

Ramon clarified that the 15% figure was a maximum and investments are surgical. He reiterated expectations for PFNA volume, net revenue, and operating margin growth. He also mentioned significant double-digit space gains for Frito-Lay. Steve added that sales are expected to strengthen in H2, while EPS will be balanced H1/H2. “We expect Frito-Lay to grow volume, net revenue and operating margin this year. So that should be the framework that we operate in.”

Sought more detail on the specific nature of affordability investments (packages, brands) and the observed payback (volume vs. price) from actions taken in the past year.

Ramon confirmed the surgical nature of the investments, which are well-tested and yield good ROI, driving volume return. He highlighted that increased volume flow-through, after rightsizing Frito-Lay, provides significant leverage for the business. “Volume return is pretty good, and that's what the category needs, units and volume to go up.”

Asked for drivers of the expected H2 acceleration in organic sales, specifically if it's further acceleration in PFNA or other segments like PBNA and International.

Ramon explained that International is expected to maintain mid-single-digit growth. The acceleration primarily comes from North America, with continued improvement in PBNA and food businesses (PFNA) showing sequential improvement. Mechanical acceleration from acquisitions turning organic in H2 also contributes. “the acceleration comes mostly from our North America businesses.”

PEP

PepsiCo (PEP) Q4 FY25 earnings call: guidance and Q&A

Earnings call· Dec 2025 (Q4 FY25)· Consumer Staples· Feb 3, 2026

Source: earnings call transcript

Executive summary

PepsiCo Q4 FY25 — Strategic Investments and Productivity Drive Future Growth

PepsiCo is strategically investing in affordability initiatives, innovation, and brand relaunches, funded by strong productivity gains, to drive volume and sales growth, particularly in North America. The company is proactively addressing evolving consumer needs, including the impact of GLP-1 medicines, through portion control, hydration, and functional product development. While navigating a challenging consumer backdrop, PepsiCo expects sales to strengthen in the second half of the year, supported by these initiatives and recent acquisitions.

Highlights

Frito-Lay North America (PFNA) expects to grow volume, net revenue, and operating margin in FY26.
Frito-Lay anticipates double-digit average space gains in new resets for both main aisle and perimeter in March-April.
International business is projected to continue mid-single-digit growth in FY26, consistent with prior performance.
North America Beverages (PBNA) showed acceleration in FY25 and is expected to continue this trend in FY26.
The energy portfolio (CELSIUS, Alani Nu) is contributing positively, reaching close to 20% market share.

Concerns

Middle- and low-income consumers in the U.S. remain stretched and choiceful, impacting purchasing decisions.
Advertising spend was down $500 million in 2025, though expected to increase in 2026.
Mountain Dew has been a more challenging project, requiring segmented and granular marketing efforts.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year sales growth	strengthen in the second half high materiality	FY26	Medium
Full-year EPS	pretty balanced high materiality	FY26	Medium
International business growth	mid-single-digit growth medium materiality	FY26	High
North America Beverages (PBNA) acceleration	continue medium materiality	FY26	Medium
Frito-Lay North America (PFNA) performance	grow volume, net revenue and operating margin high materiality	FY26	High
PBNA margin improvement	continue to improve medium materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Frito-Lay North America (PFNA) Expected to grow volume, net revenue, and operating margin in FY26, driven by affordability investments and double-digit space gains in new resets. Volume growth: expectedNet revenue growth: expectedOperating margin growth: expectedAverage space gain in new resets: double digit	—	—	—	expand
PepsiCo Beverages North America (PBNA) Showed acceleration in FY25 and expected to continue in FY26. Focus on increasing competitiveness and improving margins. Energy portfolio (CELSIUS, Alani Nu) is a significant contributor. Energy portfolio market share: close to 20%	—	accelerating	—	improving
International Expected to continue performing at similar levels to last year, with mid-single-digit growth. Positive trends noted in Mexico, China, and South Africa.	—	mid-single-digit growth	—	—

Product announcements

Product	Type	Timeline
Lay's	launch	starting with Super Bowl
Tostitos	launch	starting early in the year
Gatorade	launch	later in the year
Quaker	launch	later in the year
Pepsi Zero Sugar	update	—
Mountain Dew Baja	update	—

Deals & partnerships

CELSIUS partnership

PepsiCo participates in the energy category through a distribution margin and ownership stake in CELSIUS, which continues to grow.

Alani Nu acquisition

The integration of the Alani Nu portfolio into PepsiCo's business has been positive, with execution metrics improving. Full distribution is still underway, with further acceleration expected.

poppi acquisition

An acquisition made earlier in the year, poppi, will transition into organic growth in July FY26, contributing to the acceleration of the portfolio.

Siete acquisition

An acquisition made earlier in the year, Siete, will transition into organic growth in March FY26, contributing to the acceleration of the portfolio.

Risks & headwinds

Stretched middle- and low-income consumers FY26

Consumers are choiceful and need to be earned daily.

Mitigation:Surgical affordability investments, portion control, and strategic innovation to meet consumer needs and drive frequency.

Broader adoption of GLP-1 medicines Ongoing

Assumed to increase as options evolve and become more affordable.

Mitigation:Focus on portion control (single-serve), hydration, fiber, and protein innovation. Exploring new cooking methods (baked, air-fried) to align with GLP-1 consumer habits. Viewing as an opportunity rather than solely a threat.

Weaker macroeconomic conditions in Western Europe FY26

Qualitatively weaker.

Mitigation:Adjusting strategies to regional market conditions; guidance is built on continuistic trends.

Mountain Dew brand performance Ongoing

More difficult project, but showing progress.

Mitigation:Iterating innovation (e.g., Baja), employing segmented and granular marketing models tailored to different parts of the country, and focusing on local relevance.

Q&A highlights

Asked for more color on PFNA's accelerated affordability initiatives, expected price point reductions, and how growth and profitability will be balanced given productivity funding.

Management stated they are playing offense with surgical, high-ROI investments in affordability for low- and middle-income consumers, funded by productivity. They expect PFNA operating margins to expand, balancing growth and profitability through volume acceleration and space gains.

“We expect Frito-Lay to grow volume, net revenue and operating margin this year.”

asked by Bonnie Herzog · answered by Stephen Schmitt

2 min read 6 chapters

Detailed narrative

PFNA Affordability and Investment Strategy

PepsiCo is accelerating affordability initiatives in PFNA during the first half of the year, focusing on specific brands, formats, and channels to address friction for low- and middle-income consumers. These surgical investments, which have shown strong ROI in testing, are funded by productivity gains.

The strategy also includes significant space gains for Frito-Lay, with average double-digit increases in new resets for both main aisle and perimeter, starting around March-April, aiming to drive category growth and higher participation.

Innovation and Core Brand Relaunches

The company is pursuing a multi-vector strategy combining core brand restaging with innovation in high-growth periphery categories. Major relaunches include Lay's (globally, with new visuals emphasizing freshness, simple ingredients, and avocado/olive oil versions), Tostitos, Gatorade (including a low sugar, no artificials version), and Quaker (with emphasis on fiber and whole grains).

These efforts aim to reposition brands, attract younger households, and provide functionality that meets evolving consumer preferences.

Addressing GLP-1 Adoption

PepsiCo acknowledges the likely broader adoption of GLP-1 medicines and views it as both a threat and an opportunity. The company's strategy involves emphasizing portion control, with over 70% of its U.S. food business already in single-serve formats. Significant opportunities are identified in hydration (Gatorade, Propel), fiber (Quaker, SunChips), and protein.

PepsiCo is also exploring new cooking methods like baked and air-fried products to align with consumer habits on GLP-1 medication, aiming to transform this trend into a growth driver.

North America Beverage Business (PBNA) Competitiveness

PBNA is focused on increasing competitiveness, particularly in soft drinks and functional hydration. The energy portfolio, including CELSIUS and the recently integrated Alani Nu, is performing well and now holds close to 20% market share, contributing to the fast-growing energy category. PepsiCo is committed to improving PBNA's margins in North America, moving towards its long-term targets, supported by strong execution and strategic investments.

Integrated Distribution Initiative

PepsiCo is actively testing integrated food and beverage distribution models in Texas and Florida to eliminate duplications and create advantages. Initial insights show positive results in integrated delivery and inventory points, leading to cost efficiencies and improved customer service. The company plans to provide a detailed update on these strategic plans later in the year, emphasizing that the solution will be a scalable model tailored to regional nuances, potentially including small refranchising models in specific areas.

Macroeconomic Outlook and Guidance Framework

The company's FY26 guidance is based on a continuistic macroeconomic backdrop, characterized by stretched and choiceful middle- and low-income consumers in the U.S. Internationally, performance varies, with optimism for Mexico, China, and the Middle East, while Western Europe shows some weakness. These regional trends and consumer behaviors are integrated into the guidance, reflecting a data-driven approach to market conditions.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.