PepsiCo beats Q1 estimates as snack revival gains momentum

PepsiCo reported better-than-expected earnings and revenue for the first quarter, signalling early success in efforts to revive its underperforming snacks business even as broader economic uncertainty persists.

The food and beverage giant said net income rose to $2.33 billion, or $1.70 a share, for the quarter ended March 21, compared with $1.83 billion, or $1.33 a share, a year earlier.

Adjusted earnings came in at $1.61 per share, ahead of analysts’ expectations of $1.54 per share, according to FactSet data.

Revenue climbed 8.5% year-on-year to $19.44 billion, surpassing Wall Street forecasts of $18.95 billion. On an organic basis, revenue increased 2.6%.

Shares of the company edged up about 1% in premarket trading following the results.

Snack turnaround begins to deliver results

PepsiCo has been working to revive demand in its snacks segment through a combination of pricing adjustments, product innovation and brand refreshes.

The company has cut prices across parts of its portfolio and revamped major brands such as Lay’s and Gatorade to better align with shifting consumer preferences.

Chief executive Ramon Laguarta said these measures are starting to show results.

"We are pleased with our first-quarter results, which featured an acceleration in both net revenue and organic revenue growth with a notable improvement in convenient foods organic Volume," he said.

Laguarta added that performance improvements were visible across geographies.

The international business remained resilient, he said, while North America showed steady progress in the quarter.

He noted that while macroeconomic conditions remain uncertain, the company is focused on executing its strategy.

Laguarta said PepsiCo will continue to manage costs carefully and invest in growth initiatives.

Innovation and brand refresh drive growth strategy

A key part of PepsiCo’s strategy has been to tap into evolving consumer demand, particularly for products offering higher protein and fiber content.

The company has introduced new offerings such as Doritos Protein, Good Warrior beef sticks, Smartfood Fiberpop and SunChips fiber, as it looks to expand its presence in functional and health-focused categories.

Laguarta said PepsiCo expects to broaden distribution of these products and deepen consumer engagement over the course of the year.

He pointed to initiatives such as Lay’s sponsorship of the 2026 FIFA World Cup as part of efforts to strengthen brand visibility.

PepsiCo is also overhauling several of its flagship brands, including Tostitos and Quaker, with updated visuals, simplified ingredients and enhanced marketing.

The company is similarly focused on strengthening its beverages business, particularly Gatorade.

It plans to simplify packaging and better communicate the benefits of hydration, while gradually removing artificial colours from the portfolio.

Damian Browne, senior vice president of research and development for PepsiCo’s US beverage arm, said misconceptions around hydration remain widespread.

"One of the biggest misconceptions about hydration is that it only matters for elite athletes or extreme situations," he said.

He added that in reality, mild to moderate dehydration can build gradually throughout the day for most people.

Outlook maintained amid uncertainty

Despite the improving performance, PepsiCo acknowledged that the macroeconomic environment has become more volatile.

Laguarta said the company will “focus on controlling what we can,” including continued innovation and brand investment.

PepsiCo maintained its full-year outlook, expecting organic revenue growth of 2% to 4% and constant-currency earnings per share growth of 4% to 6%.

While challenges such as shifting consumer demand and cost pressures remain, the company’s first-quarter results suggest its strategy to reinvigorate key segments is beginning to gain traction.