PepsiCo Positioned for Solid Growth Despite Soft Beverage Trend, Says BofA
PepsiCo’s long-term growth prospects remain intact despite recent volume headwinds in the beverage category, according to new analysis from Bank of America (BofA). The investment bank has reiterated a “Buy” rating on the multinational food and beverage giant, highlighting strategic pricing and brand strength as key drivers of resilience amid a more cautious consumer environment.
While category softness in non-alcoholic beverages is expected to persist in the short term, BofA analysts emphasized that PepsiCo’s diversified portfolio and global scale offer a buffer against near-term pressures. In particular, the beverage segment has seen volume softness, but pricing power has helped protect margins. BofA anticipates an eventual volume rebound as macro conditions normalize, supported by PepsiCo’s innovation pipeline and marketing investments.
“We continue to see Pepsi as a top-tier global consumer staples company with strong execution and brand equity,” the BofA note stated. The firm maintained a price target of $195, implying a roughly 15% upside from current levels.
Q2 and Market Implications
Looking ahead to the second quarter, BofA expects flat to low-single-digit revenue growth for PepsiCo, with some moderation in pricing compared to prior quarters. The report notes that while pricing gains have largely peaked across the industry, PepsiCo’s prior moves in this space will continue to support topline strength.
Volume pressure is expected to persist in North American Beverages during Q2, though snacks—particularly Frito-Lay and international segments—remain a bright spot. The company’s focus on value-oriented pack formats and targeted promotional strategies positions it well to capture share among cost-conscious consumers.
Strategic Positioning in a Shifting Consumer Landscape
Despite macro headwinds, PepsiCo has demonstrated pricing agility and operational discipline—two factors that BofA believes will help the company outperform within the large-cap staples peer group. Key areas to watch include consumer response to reduced promotional levels and emerging strength in PepsiCo’s international businesses.
For FMCG stakeholders, PepsiCo’s approach underscores the importance of balancing price realization with volume sustainability in today’s inflation-sensitive market. The company’s ability to navigate this dynamic could offer valuable insights for category players facing similar demand shifts