PepsiCo Earnings Preview: Volume Pressure and Cost Creep Under Scrutiny
FMCG giant PepsiCo is set to release its first-quarter earnings report on April 23, with analysts closely monitoring volume trends and pricing dynamics across its beverage and snack portfolios. Following a period of significant pricing-driven growth, the market is anticipating signs of potential softness in consumer demand as price sensitivity increases.
PepsiCo has relied heavily on price increases over the past two years to offset inflationary pressures and maintain margins. However, recent quarters have revealed decelerating volume trends, raising questions about the sustainability of this pricing-led growth model. In Q4 2023, global volumes slipped by 4% in beverages and 2% in convenient foods, despite price-mix growth of 9%.
The central concern for stakeholders heading into Q1 is whether volumes will continue to contract under higher price points. According to consensus estimates, PepsiCo is expected to report revenue of $18.1 billion and earnings per share (EPS) of $1.52 for the quarter—figures that imply modest top-line growth and ongoing margin management.
While cost inflation has moderated compared to peak levels in 2022, PepsiCo continues to face elevated expenses, particularly in logistics, packaging, and labor. The company’s ability to manage input costs while preserving or expanding margin will be a key focus area. Analysts will weigh the success of PepsiCo’s productivity initiatives and supply chain optimization in the updated guidance.
By geography, North America remains a stronghold for PepsiCo, particularly in the Frito-Lay and Quaker segments. However, weakness in international markets, coupled with forex headwinds and varying economic conditions, may affect consolidated performance figures.
For FMCG professionals, PepsiCo’s upcoming results will offer insights into the broader health of the packaged goods sector, particularly regarding consumer elasticity in response to pricing strategies. With volume resilience becoming increasingly critical, peer companies in the food and beverage space will be watching closely to benchmark their own planning assumptions for 2024.
PepsiCo shares have remained resilient, up nearly 3% year to date, indicating cautious investor optimism. However, whether the company can deliver profitable growth through a balance of volume recovery and disciplined pricing remains the key narrative going forward.