PepsiCo (NASDAQ:PEP) executives used the company’s fourth-quarter 2025 earnings Q&A session to outline plans to accelerate growth in North America, emphasizing targeted affordability actions at Frito-Lay, stepped-up brand “restaging” efforts across several flagship products, and continued focus on productivity to fund commercial investments.
Frito-Lay affordability push described as “surgical” and ROI-driven
Management faced multiple questions on PepsiCo Foods North America (PFNA), particularly around increased affordability initiatives slated for the first half of 2026. CFO Steve Schmitt said the company is “playing offense” and called the investment “manageable,” noting it is included in PepsiCo’s guidance and supported by productivity gains that showed up in the fourth quarter and are expected to “carry over.”
Asked about a media report referencing price cuts as large as 15% in some PFNA items, Laguarta said the article cited a maximum and reiterated the plan is targeted. He also provided a broad performance framework for the segment, saying PepsiCo expects Frito-Lay to grow “volume, net revenue, and operating margin” in 2026, with volume and net revenue growth expected “early in the year.”
On payback, Laguarta said the company has seen “pretty good” volume response in its test markets and noted that incremental volume provides leverage after Frito-Lay has been “right-sized.” He said PepsiCo will provide additional updates as more data becomes available in future quarters.
Expected shelf-space gains tied to resets and throughput
Laguarta highlighted what he described as “double-digit” shelf-space gains for Frito-Lay tied to upcoming store resets. He said the average space gain in new resets of both the main aisle and the perimeter will be double-digit, and that PepsiCo expects to be “growing double-digit space” starting around March and April as retail partners change layouts.
In response to a question about where additional space will come from, Laguarta said gains will occur in “multiple parts of the store,” including both the main shelf and the perimeter. He connected the space expansion to increased unit movement as the company makes the category more affordable, as well as the need for more in-store capacity to fulfill online demand and improve the in-store shopping experience.
Brand “restaging,” innovation, and advertising investment priorities
Executives discussed a broad effort to refresh major brands and pair that with innovation in faster-growing parts of categories. Laguarta said PepsiCo is starting the year with Lay’s and Tostitos and plans later relaunches for Gatorade and Quaker, calling them “big, big brands” for the company.
Using Lay’s as an example, Laguarta described changes aimed at shifting consumer perceptions toward “simplicity, nature, freshness,” and “simple ingredients,” including removing artificial ingredients and elevating messaging around farmers and potato sourcing. He also said consumers will see Lay’s versions made with oils such as avocado oil and olive oil, and that PepsiCo will invest more in advertising and marketing as well as price points as part of a “holistic relaunch.”
On innovation beyond core brands, Laguarta cited examples including Naked and “Pepsi prebiotics” as evidence that consumers will re-engage when products provide the “right excuses” to enter the category, such as “no artificials.” He also pointed to product development themes including fiber, protein, portion control, and multi-packs, saying PepsiCo is getting more granular on pack combinations, price points, and occasions.
PepsiCo also addressed advertising trends. In response to a question about a decline in advertising spending in 2025, Schmitt said the company gained efficiencies in both working and non-working advertising, and added that the expectation that advertising would increase in 2026 is “a good one,” as PepsiCo plans to be “very growth-minded” and ensure messaging on value and innovation comes through.
Guidance cadence: second-half sales strengthening, balanced EPS
When asked about the shape of 2026, Laguarta said PepsiCo expects sales growth to strengthen in the second half as initiatives take hold and as acquired brands become part of organic growth. He added that from an EPS standpoint, the year is expected to be “pretty balanced” between the first and second halves.
Discussing segment-level expectations, Laguarta said international performance is expected to be consistent with recent results, describing “mid-single digit” growth and calling out Mexico, China, and South Africa as markets with good performance trends. He said the acceleration in organic growth is expected to come “mostly” from North America, including some continued acceleration in beverages and improvement in the food business across volume and net revenue, with sequential momentum cited (December better than October, with expectations for continued improvement).
Schmitt also provided timing for when acquisitions will roll into organic growth comparisons, saying Siete is expected to flip into organic results around March, Poppi around July, and Alani Nu toward the end of the year. He said the company has not been specific about the exact contribution but would report progress as quarters unfold.
PBNA: competitiveness, margin improvement, and energy participation
On PepsiCo Beverages North America (PBNA), Laguarta said the company is happy with progress and will focus in 2026 on improving competitiveness through execution, affordability, and brand building, particularly in soft drinks and parts of the functional hydration portfolio. He also said PepsiCo intends to continue improving PBNA margins in line with targets previously shared.
On energy, Laguarta said PepsiCo is pleased with its approach, combining distribution margins with its ownership participation in Celsius. He said Celsius “continues to grow,” and described the integration of Alani Nu into PepsiCo’s system as “pretty positive” so far, though still early and not fully rolled out across all distributors. He said execution metrics are improving and that PepsiCo expects more acceleration in coming months. Laguarta also said the company’s energy portfolio participation is “close to 20% now” and called it a meaningful position in a category that continues to grow.
For trademark Pepsi, Laguarta said the brand improved in the U.S. and is performing well globally, but he added PepsiCo is “not satisfied yet” and sees more potential. He highlighted Pepsi Zero Sugar, citing consumer preference results from a Pepsi challenge, and said the company is investing in advertising to encourage trial. He also pointed to foodservice campaigns and improving away-from-home availability as drivers of volume and awareness.
Mountain Dew, Laguarta acknowledged, has been “more difficult,” though he said progress is being made through innovation such as Baja and flavor extensions. He described Mountain Dew as regionally diverse and said marketing needs to be segmented and granular. He added that 2025 was better than 2024 and that PepsiCo expects 2026 to be better than 2025 for the brand.
Separately, Laguarta addressed GLP-1 adoption, saying PepsiCo assumes broader usage over time and views the shift as presenting “more opportunities than threats,” though both exist. He cited portion control as a key lever, noting the company has tested behavior among families using GLP-1s and sees continued category engagement in smaller portions. He also emphasized opportunities in hydration, fiber, whole grains, protein, and alternative cooking methods such as baked, popped, and air-fried products, tying Quaker’s relaunch and other brands to those needs.
On distribution strategy, Laguarta said PepsiCo is testing integrated food and beverage distribution in markets including Texas and Florida. He said early insights show benefits from integrated delivery and inventory points, improving cost efficiency and customer service. He indicated PepsiCo plans to provide more detailed updates “later in the year,” and said any U.S. approach would not be “one-size-fits-all,” leaving room for localized solutions and, potentially, limited refranchising in small areas.
In closing remarks on the macro backdrop, Laguarta said PepsiCo’s guidance assumptions are consistent with what the company saw in the fourth quarter, including a “stretched” and “choiceful” middle- and low-income consumer in the U.S. Internationally, he described conditions as mixed, with optimism in Mexico and positive trends in China and the Middle East, some weakness in Western Europe, and Brazil “neutral.”
About PepsiCo (NASDAQ:PEP)
PepsiCo, Inc (NASDAQ: PEP) is a multinational food and beverage company headquartered in Purchase, New York. The company develops, manufactures, markets and sells a broad portfolio of branded food and beverage products, including carbonated and noncarbonated soft drinks, bottled water, sports drinks, juices, ready-to-drink teas and coffees, salty snacks, cereals, and other convenient foods. Its leading consumer brands include Pepsi, Mountain Dew, Gatorade, Tropicana, Quaker, Lay’s, Doritos and Cheetos, among others.
Formed through the 1965 merger of Pepsi-Cola and Frito-Lay, PepsiCo has grown into a global business with integrated manufacturing, distribution and marketing operations.
