PepsiCo cuts full-year earnings forecast amid tariff pressures, rising costs, and consumer spending slowdown 

USA – PepsiCo has revised its full-year earnings forecast downward, citing rising production costs and weaker consumer spending amid ongoing global trade tensions. 

The company pointed to increased uncertainty driven by U.S. President Donald Trump’s expansive tariffs, which are expected to raise supply chain expenses significantly. 

“As we look ahead, we expect more volatility and uncertainty, particularly related to global trade developments, which we expect will increase our supply chain costs,” PepsiCo CEO Ramon Laguarta said in a statement.  

“At the same time, consumer conditions in many markets remain subdued and similarly have an uncertain outlook.” 

The beverage and snack giant also announced plans to accelerate its shift toward using natural flavors and colors in its products. This move follows recent calls from U.S. health officials, including Health Secretary Robert F. Kennedy Jr., urging food companies to eliminate petroleum-based artificial colors.  

According to Laguarta, 60% of PepsiCo’s business is already free from artificial colors, with Lays and Tostitos brands set to complete the transition by the end of this year. The company plans to phase out artificial colors across more brands or offer natural alternatives over the coming years. 

“We stand by the science. Our products are very safe and there’s nothing to worry about,” Laguarta stated during a conference call with investors. “But we understand that there’s going to be, probably, a consumer demand for more natural ingredients.” 

PepsiCo now anticipates that its core constant currency earnings per share will remain roughly unchanged from the previous year, a reduction from its earlier forecast of mid-single-digit growth.  

However, it reiterated expectations for a low-single-digit increase in organic revenue. Chief Financial Officer Jamie Caulfield indicated that while mitigation plans for tariffs are in place, some initiatives will require more time to implement. 

The company highlighted that persistent double-digit price increases and evolving consumer preferences have weakened demand for its products. Caulfield also noted that U.S. consumer confidence has deteriorated further in recent months. 

PepsiCo expects “elevated levels of volatility and uncertainty” for the remainder of the year, with geopolitical tensions impacting performance in several markets. Sales have been lagging in China, although growth in India and Brazil provided some positive momentum in the first quarter. 

In the quarter, PepsiCo’s net revenue fell 1.8% to US$17.9 billion, slightly exceeding Wall Street expectations of US$17.8 billion, according to FactSet data.  

Organic revenue, excluding impacts from acquisitions, divestitures, and currency fluctuations, rose 1.2%. 

Global volume declined 3% in the convenient foods unit and remained flat in the beverage segment.  

In North America, food volume dropped 1%, while beverage volume decreased by 3%, prompting the company to undertake corrective measures to strengthen its domestic performance. 

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