PepsiCo says American shoppers are pulling back on some of its best-known drinks and snacks, a sign that higher everyday costs are still shaping what people toss into their carts. The slowdown comes as Pepsi has already faced pressure from factory closures and restructuring while trying to win back budget-conscious consumers.
The company reported stronger-than-expected overall revenue for the second quarter, with total revenue rising 6.4% to $24.2 billion. But its North American business told a more cautious story. PepsiCo said beverage volumes fell 4% in North America, while snack volumes were flat. The company pointed to tighter household budgets and higher gas prices — which hit a four-year high of $4.56 a gallon in late May — hurting impulse purchases at gas stations and convenience stores.
That matters because PepsiCo is not just the company behind Pepsi. It also owns Frito-Lay, Gatorade, Mountain Dew, Doritos, Lay’s, Cheetos, Tostitos and Quaker.
In other words, when PepsiCo says shoppers are pulling back, it is talking about a huge slice of the American snack and beverage aisle.
Price cuts have not fixed the problem
PepsiCo has already tried to make some products more affordable.
Earlier this year, the company cut prices on brands such as Lay’s, Doritos, Tostitos and Cheetos by as much as 15% in North America, after consumers pushed back against years of price increases. Those cuts helped improve snack demand in the first quarter, but the momentum faded in the second quarter.
Reuters reported that PepsiCo’s North American food sales dropped 2% in the quarter, primarily because the company was taking lower effective pricing to attract value-conscious shoppers.
The problem is that cheaper chips do not help as much if customers are still worried about the full cost of gas, groceries, rent and other bills.
PepsiCo CEO Ramon Laguarta said gas prices hurt demand more than the company expected, adding that the U.S. consumer was weaker than anticipated. He and CFO Steve Schmitt both pointed to soft impulse-buy traffic in the convenience and gas channel as a key driver of the North American shortfall.
Wall Street took notice. RBC Capital Markets analyst Nik Modi said PepsiCo’s pace of improvement appears to have stalled, and predicted the company will keep losing beverage market share to rivals Coca-Cola and Keurig Dr Pepper.
Pepsi is trying smaller packs and healthier options
PepsiCo says it is working with retailers on more affordable pack sizes and meal bundles. The company is also pushing newer products such as Gatorade Lower Sugar, Doritos Protein, Propel powder and Quaker Protein Rice Crisps as shoppers look for healthier or higher-protein options.
The company’s international business performed better, with organic volume growing at its fastest pace since 2022 and revenue climbing across Asia Pacific, Europe, the Middle East, Africa and Latin America. That strength helped offset North American weakness and push total revenue to $24.2 billion. PepsiCo also reaffirmed its full-year 2026 guidance and confirmed a 54th consecutive annual dividend increase, even as shares fell on the earnings report.
But the North American weakness shows that even famous brands are not immune when shoppers become more selective.
For consumers, the message is simple: PepsiCo is cutting prices, adjusting packages and refreshing products because Americans are thinking harder before buying that extra soda, sports drink or bag of chips.
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