PepsiCo surprised with revenue growth. How is it adapting to the healthy eating trend?

PepsiCo, which owns brands such as Lay's, Doritos and Mountain Dew, reported sales and earnings growth in the second quarter, delivering a surprise to Wall Street. International markets and adapting to healthy eating trends were the main drivers, despite weakness in the U.S. and pressure from duties. The company's shares soared nearly 7%.

PepsiCo's second-quarter revenue increased approximately 1% to $22.73 billion, while Wall Street expected a 0.99% decline, according to Reuters. Organic sales growth reached 2.1%, also beating analysts' estimates, which cites Bloomberg.  

Earnings per share came in at $2.12, against a consensus forecast of $2.03, stated Reuters. 

However, the company is still facing a decline in demand for its products. Global sales fell 1.5% in the food category and were flat in the beverage category, notes CNBC. North America is also down, though management insists things are improving.  

"Our international business continues to show positive momentum and our North American operations improved execution and competitiveness in key categories and channels," said PepsiCo CEO Ramon Laguarta.

The company reiterated its outlook for fiscal 2025, with organic sales growth in the low-single-digit (low-single-digit) and adjusted earnings per share roughly at last year's level. PepsiCo said it still expects additional supply chain costs in the second half of the year due to duties, and reiterated its strategy to soften the blow, including by reviewing material procurement sources.

The company's shares jumped almost 7% in New York trading after the report was published. If such dynamics persists until the close, it may become the largest one-day growth for PepsiCo securities for more than 5 years, since March 2020. In 2025, the company's value decreased by 5.6%, for comparison: the S&P 500 index for the same period rose by 6.5%.

The past few quarters have been difficult for PepsiCo, with revenue declining as the company faced inflationary pressures and changes in consumer behavior. Customers have turned toward healthier eating and weight loss, Quartz writes. With a wide range of products - from breakfast foods and fruit juices to salty snacks and soft drinks - PepsiCo is trying to adapt to a focus on products with less processing, Bloomberg writes. 

The company has responded to changes in demand by expanding its product portfolio, including through the recent acquisition of the Poppi prebiotic soda brand, Reuters recalls. It is also promising to eliminate synthetic colors from products delivered to U.S. schools in time for the start of the new school year, launch new versions of Cheetos and Doritos chips without artificial colors and flavors, and expand the use of avocado and olive oil in a number of brands. PepsiCo is also working to sell smaller, portion-controlled sizes.

Another area of focus is high-protein products.  "Consumers today are incorporating protein into their diets much more actively than they did a few years ago. Мы можем предложить доступные решения в масштабах массового рынка», — отметил гендиректор PepsiCo, его цитату приводит Quartz. The company is increasing its focus on healthier brands - for example, by fortifying "select products with protein, fiber and whole grains," according to the press release.

And to revitalize its beverage division in North America, which showed a decline in the second quarter, PepsiCo is going to bet on "zero sugar, functional hydration and sports nutrition," wrote Quartz. 

During a conference call with investors following the release of a report by the head of PepsiCo on President Donald Trump's recent statements: he wrote that he discussed a switch to cane sugar instead of cheaper corn syrup in beverages sold in the U.S. with Coca-Cola. Here's what Laguart replied:  "If the consumer tells us he prefers products with sugar and natural ingredients, we will give him exactly those products - with sugar and natural ingredients."   

As President Donald Trump escalates the trade war and inflation is affected, consumers are getting tighter control over their budgets. These macroeconomic challenges, combined with U.S. Health Secretary Robert F. Kennedy Jr.'s campaign against food additives, put Pepsi in a difficult position, Quartz notes.

Trump's recently passed "great and wonderful law" that eliminates tax deductions for office snacks starting in 2026 could also take an additional hit, which would likely negatively impact the company's sales, the publication believes.

"Expectations were underestimated, and while the results can't be called impressive, they still beat forecasts," analyst Nik Modi of RBC Capital Markets commented on investor excitement after the report, he was quoted by Reuters.  

On Wall Street, PepsiCo's plans are viewed with restraint - investors are waiting for evidence of a sustained recovery, especially amid pressure from consumer trends and tariff policy. Of the 24 analysts tracking the company's stock, 16 recommend holding it in the portfolio (Hold rating), seven recommend buying (Buy and Overweight), but only one advises selling (Sell). The average target price is roughly in line with current quotes.

This article was AI-translated and verified by a human editor