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Even an Addison Rae banger couldn’t help PepsiCo this quarter.
PepsiCo cut its full-year organic revenue guidance as consumers reduced their spending on drinks and snacks, and the company posted “its second straight quarter of weaker-than-expected sales,” CNBC reported.
The Purchase, New York-based company said its Q3 performance was impacted by “subdued” US demand, the Quaker Foods recalls in North America, and “business disruptions due to rising geopolitical tensions in certain international markets.”
Pepsi now anticipates organic revenue growth in the low single digits, below its previously forecast growth of 4%. In Q3, organic revenue rose 1.3%. Revenue came in at $23.3 billion, lower than the $23.8 billion LSEG analysts expected, according to CNBC.
It’s becoming clear that would-be PepsiCo consumers are increasingly value-conscious: After raising prices every quarter for over two years, in Q3 the company noted demand for snack purchases was “subdued.”
“In the US, there is clearly a consumer that is more challenged,” chairman and CEO Ramon Laguarta said during the company’s Q2 earnings call. “They want more value to stay with our brands.”
That seemed to largely hold true in Q3, as sales volume for Frito-Lay North America reported a 1.5% volume dip.
“After three years of outsized growth for Frito-Lay…we knew this year was going to be a year of normalization, and that’s what’s happening,” Laguarta said on a Q3 earnings call. “The consumer is reassessing patterns.”
Consumer value will likely be central to Pepsi’s strategy moving forward, particularly as the company’s pricing strategies are coming under scrutiny. Earlier this week, Sen. Elizabeth Warren of Massachusetts and Rep. Madeleine Dean of Pennsylvania sent letters to PepsiCo, Coca-Cola, and General Mills accusing the three food giants of “dodging taxes” and engaging in shrinkflation, the practice of altering product volume or packaging so consumers get less, while keeping prices the same or raising them.
Consumers will likely insist on seeing more bang for their buck before they, like Addison Rae, are sitting on anyone’s lap, sippin’ Diet Pepsi.