Q4 2025 PepsiCo Inc Earnings Call

February 3, 2026

Speaker #1: Good morning, and welcome to PepsiCo's 2025 fourth quarter earnings question and answer session. Your lines have been placed on listen-only until it's your turn to ask a question.

Operator: Good morning, and welcome to PepsiCo's Q4 2025 earnings question and answer session. Your lines have been placed on listen only until it's your turn to ask a question. Today's call is being recorded and will be archived at www.pepsico.com. It is now my pleasure to introduce Mr. Ravi Pamnani, Senior Vice President of Investor Relations. Mr. Pamnani, you may begin.

Speaker #1: Today's call is being recorded and will be archived at www.pepsico.com. It is now my pleasure to introduce Mr. Ravi Pamnani, Senior Vice President of Investor Relations.

Speaker #1: Mr. Pamnani, you may

Speaker #1: begin. Thank you, Kevin, and good

Ravi Pamnani: Thank you, Kevin, and good morning, everyone. I hope everyone has had a chance this morning to review our press release and prepared remarks, both of which are available on our website. Before we begin, please take note of our cautionary statement. We may make forward-looking statements on today's call, including about our business plans, guidance, and outlook. Forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today, 3 February 2026, and we are under no obligation to update. When discussing our results, we refer to non-GAAP measures, which exclude certain items from reported results. Please refer to our Q4 2025 earnings release and 2025 Form 10-K, available on PepsiCo.com, for definitions and reconciliations of non-GAAP measures and additional information regarding our results, including a discussion of factors that could cause actual results to materially differ from forward-looking statements.

Q4 2025 PepsiCo Inc Earnings Call

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Q4 2025 PepsiCo Inc Earnings Call

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Tuesday, February 3rd, 2026 at 1:15 PM

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Speaker #2: Good morning, everyone. I hope everyone has had a chance this morning to review our press release and prepared remarks, both of which are available on our website.

Speaker #2: Before we begin, please take note of our cautionary statement. We may make forward-looking statements on today's call, including about our business plans, guidance, and outlook.

Speaker #2: Forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today, February 3, 2026, and we are under no obligation to update.

Speaker #2: to non-GAAP measures, which When discussing our results, we refer exclude certain items from reported results. Please refer to our fourth quarter 2025 earnings release and 2025 Form 10-K available on PEPSICO.com for definitions and reconciliations of non-GAAP measures and additional information regarding our results including a discussion of factors that could cause actual results to materially differ from forward-looking statements.

Speaker #2: Joining me today are PepsiCo's Chairman and CEO, Ramon Laguarta, and PepsiCo's Executive Vice President and CFO, Steve Schmidt. We ask that you please limit yourself to one question.

Ravi Pamnani: Joining me today are PepsiCo's Chairman and CEO, Ramon Laguarta, and PepsiCo's Executive Vice President and CFO, Steve Schmitt. We ask that you please limit yourself to one question. With that, I will turn it over to the operator for the first question.

Joining me today are PepsiCo's Chairman and CEO, Ramon Laguarta, and PepsiCo's Executive Vice President and CFO, Steve Schmitt. We ask that you please limit yourself to one question. With that, I will turn it over to the operator for the first question.

Speaker #2: And with that, I will turn it over to the operator for the first question.

Speaker #3: Thank you. In order to ask a question and make a comment, please press star followed by 11 on your touch-tone phone at any time.

Operator: Thank you. In order to ask a question or make a comment, please press star followed by one one on your touchtone phone at any time. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Bonnie Herzog with Goldman Sachs. Your line is open.

Speaker #3: We'll pause for a moment while we compile our Q&A roster. Our first question comes from Bonnie Herzog with Goldman Sachs; her line is open.

Speaker #4: Thank you and good morning, everyone.

Bonnie Herzog: Thank you, and good morning, everyone. I, I had a question this morning on PFMA. You did announce that you're gonna be accelerating your increased affordability initiatives this year during the first half. So I guess, you know, hoping for a little more color on this strategy, you know, what's been working? And then, you know, how much lower, you know, will your average price points, you know, fall? And then you did mention productivity savings will help fund these commercial plans, and I guess in the context of this, you expect PFMA op margins to expand this year. So if you could touch on how, you know, you'll ultimately balance growth and profitability for that business, that would be helpful. Thanks.

Speaker #5: Hi, I had a question this morning on PFMA. You did announce that you're going to be accelerating your increased affordability initiatives this year during the first half.

Speaker #5: So I guess, you know, hoping for a little more color on this strategy. You know, what's been working? And then, you know, how much lower will your average price points, you know, fall?

Speaker #5: And then you did mention productivity things will help fund these commercial plans. And I guess in the context of this, you expect PFMA op margins to expand this year.

Speaker #5: So if you could touch on how, you know, you'll ultimately balance growth and profitability for that business, that would be helpful. Thanks.

Steve Schmitt: Hey, Bonnie, good morning. It's Steve. Maybe I'll take a stab at it, and let Ramon comment a little further. In regards to your question on the investments we're making in PFNA, I'd say there's three points. First, and most importantly, we're playing offense here. And second, we're excited about the initiative and the benefits that'll come both in volume and sales growth. And third, from an overall perspective, this investment's manageable for the business. It's included in our guidance and our productivity progress, as you mentioned, certainly that's gonna help fund the initiatives that we have. So we're really fortunate. You saw the productivity that we had in the fourth quarter. We expect a lot of that to carry over.

Speaker #2: Bonnie, good It's Steve. Maybe I'll take a stab at it and let Ramon comment a little further. In regards to your question on the investments we're making in PFMA, I'd say there's three points.

Speaker #2: First, and most importantly, we're playing offense here. We're in second; we're excited about the initiative and the benefits that'll come both in volume and sales growth.

Speaker #2: And third, from an overall perspective, this investment's manageable for the business. It's included in our guidance and our productivity progress, as you mentioned. Certainly, that's going to help fund the initiatives that we have.

Speaker #2: So we're really fortunate. You saw the productivity that we had in the fourth quarter. We expect a lot of that to carry over. That's going to fund some of our investments.

Steve Schmitt: That's gonna fund some of our investments, and we'll be balanced about how we use that productivity, to invest in the business and drive sales growth.

That's gonna fund some of our investments, and we'll be balanced about how we use that productivity, to invest in the business and drive sales growth.

Speaker #2: And we'll be balanced about how we use that productivity to invest in the business and drive sales growth.

Speaker #3: Yeah, Bonnie, maybe I can give a bit more color. This is part of a multi-vector strategy to drive category growth and then, obviously, our participation in the category.

Ramon Laguarta: ... Yeah, Bonnie, maybe I can give a bit more color. This is part of a multi-vector strategy to drive category growth and then obviously, our participation in the category. And this is something we've been working on since Q2 or so of last year, testing at scale in some of our key markets. We think that for some consumers, low and middle income consumers, the biggest friction they have today in our category for faster penetration is affordability. So we have been testing multiple ways to give them affordability. So this will be a very surgical, very focused on particular brands, particular formats, particular channels, investment. And from the test that we've done at scale in multiple markets, this has very good ROI for us.

Speaker #3: And this is something we've been working on since Q2 or so of last year, testing at scale in some of our key markets.

Speaker #3: I think that for some, we consumers—low and middle-income consumers—the biggest friction they have today in our category for faster penetration is affordability. So we have been testing multiple ways to give them affordability.

Speaker #3: So this will be a very surgical, very focused investment on particular brands, particular formats, and particular channels. And from the tests that we've done at scale in multiple markets, this has very good ROI for us.

Speaker #3: You should be thinking this on top of space gains—big space gains—that we're getting through the partnership with our customers because of these investments in price. We're also investing, as we said in our prepared remarks, a lot on innovation, especially to provide more functionality, simpler ingredients, and to restage some of our larger brands.

Ramon Laguarta: You should be thinking this on top of space gains, big space gains that we're getting through the partnership with our customers, because of these investments in price. We're also investing, as we said on our prepared remarks, a lot on innovation, especially to provide more functionality, simpler ingredients, restage some of our larger brands. So it's a comprehensive investment plan funded through the productivities, the right sizing with it, in Frito and other productivity opportunities we took, at the global level to reinvest in the acceleration of the category, managing the category for the long term, and making sure that we participate at a higher level in this category that is starting to grow. And we feel very good about how these different interventions will continue to drive accelerated growth in the balance of the year.

You should be thinking this on top of space gains, big space gains that we're getting through the partnership with our customers, because of these investments in price. We're also investing, as we said on our prepared remarks, a lot on innovation, especially to provide more functionality, simpler ingredients, restage some of our larger brands. So it's a comprehensive investment plan funded through the productivities, the right sizing with it, in Frito and other productivity opportunities we took, at the global level to reinvest in the acceleration of the category, managing the category for the long term, and making sure that we participate at a higher level in this category that is starting to grow. And we feel very good about how these different interventions will continue to drive accelerated growth in the balance of the year.

Speaker #3: So it's a comprehensive investment plan funded through the productivities, the right sizing with it, in freedom, and other productivity opportunities we took at the global level to reinvest in the acceleration of the category, managing the category for the long term, and making sure that we participate at a higher level in this category that is starting to grow and we feel very good about how these different interventions will continue to drive accelerated growth in the balance of the

Speaker #3: So, it's a comprehensive investment plan funded through the productivities, the right-sizing with it, in freedom, and other productivity opportunities we took at the global level to reinvest in the acceleration of the category, managing the category for the long term, and making sure that we participate at a higher level in this category that is starting to grow. We feel very good about how these different interventions will continue to drive accelerated growth in the balance of the year.

Speaker #1: Thank you. One moment for our next question. Our next question comes from Andrew Texiera with JP Morgan. Your line is open.

Operator: Thank you. One moment for our next question. Our next question comes from Andrea Teixeira with J.P. Morgan. Your line is open.

Speaker #6: Thank you and good morning, everyone. So I was hoping to, if you can comment further on the pricing reinvestment you just alluded to. There was a news article that talked about as much as 15% in some of the PFMA items, right?

Andrea Teixeira: Thank you, and good morning, everyone. So I was hoping to, if you can comment further on the pricing reinvestment you just alluded to. There was a news article that talked about as much as 15% in some of the FnA items, right? So, and you're doing the restaging. So I was hoping to see if you are- what are your tools to be able to mitigate that in the first half, or should we expect that to be a tough first half relative to what you just posted in PC and FnA? And then, related to that, it talks, I mean, obviously, you're also restaging Gatorade. So I was hoping to see if you can comment on the volume trajectory.

Speaker #6: So I'm — and you're doing the restaging. So I was hoping to see if you were — what are your tools to be able to mitigate that in the first half?

Speaker #6: Or should we expect that to be a tough first half, relative to what you just posted in PC and PFMA? And then, related to that, it talks—I mean, obviously you're also restaging Gatorade.

Speaker #6: So I was hoping to see if you can comment on the volume trajectory. You have an easier comp for PB&A as you go into the as you go into the first half in particular the second quarter.

Andrea Teixeira: You have an easier comp for PB&A, as you go into the first half, in particular, the second quarter. So if you can talk about, like, how we should be expecting the cadence of your guidance, that would be super helpful. Thank you.

You have an easier comp for PB&A, as you go into the first half, in particular, the Q2. So if you can talk about, like, how we should be expecting the cadence of your guidance, that would be super helpful. Thank you.

Speaker #6: So if you can talk about how we should be expecting the cadence of your guidance, that would be super helpful. Thank you.

Speaker #2: Okay, Andrea. Let's step back for a minute. We expect Frito to grow volume, net revenue, and operating margin this year, so that should be the framework that we operate in.

Ramon Laguarta: Okay, Andrea, let's step back for a minute. We expect Frito-Lay to grow volume, net revenue, and operating margin this year. So that should be the framework that we operate in. Now, this growth will come early in the year, okay? So we expect volume growth and net revenue growth to come early in the year. The way you should think about the pricing investments, and the article obviously talks about the maximum. As I said earlier, it will be very surgical investment, in particular, consumers, brands, channels, where we see that the biggest friction for higher frequency is price, and that's the way we've tested and the way it will go. Now, you should think about a combination of some price investment.

Speaker #2: Now, this growth will come early in the year, okay? So, we expect volume growth and net revenue growth to come early in the year.

Speaker #2: The way you should think about the pricing investments—and the article obviously talks about the maximum. As I said earlier, it will be very surgical investment in particular consumers, brands, channels where we see that the biggest friction for higher frequency is price.

Speaker #2: And that's the way we've tested, and the way we'll go. Now, you should think about a combination of some price investments—not all of it is, obviously, net revenue from PepsiCo—and large space gains.

Ramon Laguarta: Not all, not all of it is obviously net revenue from PepsiCo and a large, space gains. Just to give you a number, the average, space gain for Frito-Lay in the new, resets of the, you know, both the main aisle and the perimeter will be, double-digit. So we'll be growing double-digit space in Frito-Lay from the March, April timeframe, when most of our partners start, you know, changing their layout. So this is a good return for us and, a great return for the category as well. This category needs to grow. It's very relevant for our partners, it's relevant for us.

Not all, not all of it is obviously net revenue from PepsiCo and a large, space gains. Just to give you a number, the average, space gain for Frito-Lay in the new, resets of the, you know, both the main aisle and the perimeter will be, double-digit. So we'll be growing double-digit space in Frito-Lay from the March, April timeframe, when most of our partners start, you know, changing their layout. So this is a good return for us and, a great return for the category as well. This category needs to grow. It's very relevant for our partners, it's relevant for us.

Speaker #2: Just to give you a number, the average space gain for freedom in the new resets of both the main aisle and the perimeter will be double-digit.

Speaker #2: So we'll be growing double-digit space in Freedom from the March–April timeframe, when most of our partners start changing their layout. So this is a good return for us.

Speaker #2: And a great return for the category as well. And this category needs to grow. It's very relevant for our partners. It's

Speaker #2: relevant for us. And one

Steve Schmitt: And one other thing, Andrea, on, excuse me, you asked to think about the cadence of the quarters. We talked about, in our guidance from a sales growth standpoint, that we expected sales to strengthen in the second half as more of our initiatives are put in place and gain traction, as well as we have Poppi and some other acquisitions from prior year moving into organic growth. From an EPS perspective, we think the year will be pretty balanced from a first half, second half standpoint, and we'll certainly update you as the year progresses.

Steve Schmitt: And one other thing, Andrea, on, excuse me, you asked to think about the cadence of the quarters. We talked about, in our guidance from a sales growth standpoint, that we expected sales to strengthen in the H2 as more of our initiatives are put in place and gain traction, as well as we have Poppi and some other acquisitions from prior year moving into organic growth. From an EPS perspective, we think the year will be pretty balanced from a H1, H2 standpoint, and we'll certainly update you as the year progresses.

Speaker #7: Other thing, Andrea, on 'excuse me,' you asked to think about the cadence of the quarters. We talked about, in our guidance from a sales growth standpoint, that we expected sales to strengthen in the second half as more of our initiatives are put in place and gain traction, as well as we have Poppy and some other acquisitions from prior years moving into organic growth.

Speaker #7: From an EPS perspective, we think the year will be pretty balanced from a first half, second half standpoint, and we'll certainly update you as the year progresses.

Speaker #1: Thank you.

Operator: Thank you. One moment for our next-

Speaker #1: One moment for you. Yeah, maybe if—

Ramon Laguarta: Sorry, if I can add, Andrea, we're also restaging two big brands. We're restaging Gatorade, and we're restaging Quaker. We're starting the year with Lay's and Tostitos. Those are, you know, multibillion dollar brands for us. And then later in the year, we're gonna have big relaunches of Gatorade and Quaker, two big brands, obviously, for us that are more on the sweet spot of growth of the categories.

Speaker #3: I can—sorry, if I can add, Andrea, we're also restaging two big brands. We're restaging Gatorade, and we're restaging Quaker. We're starting the year with Lay's and Tostitos.

Speaker #3: Those are multi-billion-dollar brands for us. And then, later in the year, we're going to have big relaunches of Gatorade and Quaker—two big, big brands, obviously, for us that are more in the sweet spot of growth of the categories.

Speaker #1: Thank you. One moment for our next question. Our next question comes from Daryl Cheney with Morgan Stanley. Your line is open.

Operator: Thank you. One moment for our next question. Our next question comes from Dara Mohsenian with Morgan Stanley. Your line is open.

Speaker #8: Hey, good morning. I was just hoping for a little more detail on the focus on affordability and the price investments. Just, A, is that more focused on specific packages, brands?

Dara Mohsenian: Hey, good morning.

Ramon Laguarta: Hey there.

Dara Mohsenian: I was just hoping for a little more detail on the focus on affordability and the price investments. Just, A, is that more focused on specific packages, brands? Can you just give us a little more detail in terms of how you're thinking about that? And then, B, you know, there is some evidence, right? There's some retailers where you've taken actions already, as we look back to last year and the last few months of the year. So maybe just help us understand what level of payback you saw there. Are you seeing volume pick up more than the price investments? Is it close to the price investments? How do you sort of think about the forward outlook there relative to what you've seen so far, understanding that it'll be more aggressive actions in 2026?

Speaker #8: Can you just give us a little more detail in terms of how you're thinking about that? And then, B, there is some evidence, right?

Speaker #8: There's some retailers where you've taken actions already, as we look back to last year and the last few months of the year. So maybe just help us understand what level of payback you saw there.

Speaker #8: Are you seeing volume pick up more than the price investments? Is it close to the price investments? How do you sort of think about the forward outlook there relative to what you've seen so far?

Speaker #8: Understanding that it will be more aggressive actions in '26.

Speaker #2: Yeah, there are. So, as I mentioned, it is very surgical. This is well-tested at scale. Obviously, we're executing. It means that we got very good ROI from those investments.

Ramon Laguarta: Yeah, there are. So as I mentioned, it is very surgical. This is, well tested at scale. Obviously, we're executing. It means that we got very good ROI from those investments. Volume return is pretty good, and that's what the category needs, units and volume to go up. This not only has a good impact in the consumer, obviously being part of our business and being part of our brands, but as you can imagine, once we've right-sized Frito-Lay, as we have, the flow through of additional volume has a lot of good leverage for us. So you should think about all these components, and we'll update you more as, you know, as we get more data in coming quarters. We're very optimistic, and, you know, we started the year in a good place.

Speaker #2: Volume return is pretty good, and that's what the category needs. You need some volume to go up. This not only has a good impact on the consumer, obviously being part of our business and being part of our brands, but as you can imagine, once we've right-sized Freedom as we have, the flow-through of additional volume has a lot of good leverage for us.

Speaker #2: So you should think about all these components and we'll update you more as we get more data in coming quarters. We're very optimistic and we started the year in a good

Speaker #2: place. Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from Lauren Lieberman with Barclays. Your line is open.

Speaker #1: One moment for our next question. Our next question comes from Lauren Lieberman with Barclays. Your line is open.

Speaker #9: Great. Thanks. Good morning. We had quickly just had the time to go through the bits of the 10K before the call started. And notice that advertising was down like it was double-digits, like 500 million dollars in 2025.

Lauren Lieberman: Great, thanks. Good morning. We had quickly just had the time to go through the 10-K before the call started, and noticed that advertising was down, like, you know, it was double digits, like $500 million in 2025. So just curious about, you know, what drove that thought for 2026. You know, whether advertising would go up, but that was sort of a bigger decline than I would have expected to see for 2025, and I'd love to hear more about it. Thanks.

Speaker #9: So, just curious about what drove that thought for '26. Whether I would just think advertising would go up, but that was sort of a bigger decline than I would have expected to see for 2025.

Speaker #9: And I'd love to hear more about it. Thanks.

Speaker #2: Hey, Lauren and Steve. Thanks for your question. You're right. It did go down this year. We did get some efficiency from both the working and non-working advertising line.

Steve Schmitt: Hey, Lauren, it's Steve. Thanks for your question. You're right, it did go down this year. We did get some efficiency from both the working and non-working advertising line, and your assumption that it should go up next year is a good one, too. That's a benefit from just a cost of sales standpoint that we did get in 2025, that we would expect not to get that same benefit. So we're gonna be very growth-minded. We're gonna be making sure our messaging comes through from a value and innovation standpoint, and so we'll be investing in the sales growth for this year.

Speaker #2: And your assumption that it should go up next year is a good one too. That's a benefit, just from a cost of sales standpoint, that we did get in 2025 that we would expect not to get that same benefit.

Speaker #2: So we're going to be very growth-minded. We're going to be making sure our messaging comes through from a value and innovation standpoint. And so we'll be investing in the sales growth for this.

Speaker #2: year. Thank

Operator: Thank you. One moment for our next question. Our next question comes from Filippo Falorni with Citi. Your line is open.

Speaker #1: You. One moment for our next question. Our next question comes from Philip Ofoloni with Citi. Your line is open.

Filippo Falorni: Hi, good morning, everyone. I wanted to ask on the guidance for organic sales for 2026. You mentioned that in the second half of the year, you expect to be at the higher end of the full year guidance range. Can you walk us through, like, the drivers of the acceleration throughout the year? Because, Ramon, you mentioned before, you're expecting PFNA to return already to volume growth earlier in the year. So is it further acceleration in PFNA or maybe some acceleration in the other two segments, PBNA and International? Maybe you, you can comment on the expectations for the other two segments as well. Thank you.

Filippo Falorni: Hi, good morning, everyone. I wanted to ask on the guidance for organic sales for 2026. You mentioned that in the H2 of the year, you expect to be at the higher end of the full year guidance range. Can you walk us through, like, the drivers of the acceleration throughout the year? Because, Ramon, you mentioned before, you're expecting PFNA to return already to volume growth earlier in the year. So is it further acceleration in PFNA or maybe some acceleration in the other two segments, PBNA and International? Maybe you, you can comment on the expectations for the other two segments as well. Thank you.

Speaker #8: Hi, good morning, everyone. I wanted to ask about the guidance for organic sales. For '26, you mentioned that in the second half of the year, you expect to be at the higher end of the full-year guidance range.

Speaker #8: Can you walk us through the drivers of the acceleration throughout the year? Because, Ramon, you mentioned before you're expecting PF&A to return already to volume growth earlier in the year.

Speaker #8: So is it further acceleration in PF&A, or maybe some acceleration in the other two segments, PB&A and International? Maybe you can comment on the expectations for the other two segments as well.

Speaker #8: Thank

Speaker #8: you. Yeah,

Ramon Laguarta: Yeah, Filippo, hi. Yeah, I think the way you should think about the year is we expect our international business to continue to perform at similar levels to last year, mid-single-digit. We're seeing good performance in some of our larger markets, Mexico improving in the Q4, and then also having a good start. China as well, South Africa as well. But, you know, you should think about mid-single-digit growth for our international business. That's the way it has been performing for the last 19 quarters or so. And the acceleration comes mostly from our North America businesses, where on the beverage side, we feel good about the acceleration it's had in 2024, in 2025, and we think that it will continue.

Speaker #2: Filippo, hi. Yeah, I think the way you should think about the year is we expect our international business to continue to perform at similar levels to last year—mid-single digit. We're seeing good performance in some of our larger markets, Mexico improving in Q4, and then also having a good start.

Speaker #2: China as well. South Africa as well. But you should think about mid-single-digit growth for our international business. That's the way it has been performing for the last 19 quarters or so.

Speaker #2: So, there. And the acceleration comes mostly from our North America businesses. On the beverage side, we feel good about the acceleration it's had in '24 and '25.

Speaker #2: And we think that it will continue. So you should expect a little bit more acceleration from the beverage business. But clearly, it is our food business that has been improving throughout the year both volume and net revenue.

Ramon Laguarta: So you should expect a little bit more acceleration from the beverage business, but clearly it is our food business that has been improving throughout the year, both volume and net revenue, and December was better than October, and we expect that obviously, Q1 will be better than Q4, and so on. So that is the way we're thinking about the year. And then you have some sort of a mechanical acceleration in organic from some of the acquisitions we made earlier in the year. They turn into organic throughout the year. That will have also a some mechanical impact. But those acquisitions are very are in high growth segments of the category. That's why we did it. They've been integrated very well into our distribution systems, and we're getting additional return on those brands.

So you should expect a little bit more acceleration from the beverage business, but clearly it is our food business that has been improving throughout the year, both volume and net revenue, and December was better than October, and we expect that obviously, Q1 will be better than Q4, and so on. So that is the way we're thinking about the year. And then you have some sort of a mechanical acceleration in organic from some of the acquisitions we made earlier in the year. They turn into organic throughout the year. That will have also a some mechanical impact. But those acquisitions are very are in high growth segments of the category. That's why we did it. They've been integrated very well into our distribution systems, and we're getting additional return on those brands.

Speaker #2: And December was better than October. And we expect that, obviously, Q1 will be better than Q4 and so on. So that is the way we're thinking about the year.

Speaker #2: And then you have some sort of a mechanical acceleration in organic from some of the acquisitions we made earlier in the year. They turn into organic throughout the year.

Speaker #2: That will also have some mechanical impact. But those acquisitions are in very high-growth segments of the category. That's why we did it.

Speaker #2: They've been integrated very well into our distribution systems. And we're getting additional return on those brands. So they'll continue to grow. And they will be an acceleration of the portfolio in the second half.

Ramon Laguarta: So they'll continue to grow, and there will be an acceleration of the portfolio in the second half. So those are the main buckets of growth and how you should be thinking about the acceleration in the second half.

So they'll continue to grow, and there will be an acceleration of the portfolio in the H2. So those are the main buckets of growth and how you should be thinking about the acceleration in the second half.

Speaker #2: So those are the main buckets of growth, and how you should be thinking about the acceleration in the second.

Speaker #2: half. Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from Peter Grom with UBS. Your line is open.

Speaker #1: One moment for our next question. Our next question comes from Peter Grom with UBS. Your line is open.

Speaker #1: open. Great.

Peter Grom: ... Great. Thank you. Good morning, everyone. So, Ramon, you outlined a lot of innovation in the prepared remarks and talked about some of the success you've seen with Naked and Pepsi prebiotic. So granted, it's still very, very early, but can you just talk about what you are learning or seeing from the innovation and how that informs your view on the path forward in North America? Thanks.

Speaker #3: Thank you. Good morning, everyone. So Ramon, you outlined a lot of innovation in the prepare remarks and talked about some of the success you've seen with Naked and Pepsi prebiotics.

Speaker #3: So granted, it's still very, very early, but can you just talk about what you are learning or seeing from the innovation and how that informs your view on the path forward in North America?

Speaker #3: Thanks.

Speaker #2: Yeah, this is a great question. And obviously, we're thinking about growth in two main dimensions. One is making sure that our core brands continue to grow.

Ramon Laguarta: Yeah, it's a great question, and obviously, we're, we're thinking about growth in two main dimensions. One is making sure that our core brands continue to grow, and that's why we're investing meaningful effort from the organization and dollars to restage some of our larger brands. So if you think about the effort to relaunch Lay's globally, we did it with Pepsi two years ago. We're still getting, very good returns on that investment. Now, we're relaunching Lay's globally with a new reposition- a new positioning, you will see for the Super Bowl, based on freshness, based on farmers, simple ingredients, no artificials. We know that that is going to, bring consumers to the brand. We're relaunching Tostitos, and as I mentioned, we're relaunching Gatorade, and we're relaunching Quaker. So big brands that need to continue to, drive the machine.

Speaker #2: And that's why we're investing meaningful effort from the organization and dollars to restate some of our larger brands. So if you think about the effort to relaunch Lay's globally, we did it with Pepsi two years ago.

Speaker #2: We're still getting a very good return from that investment. Now, we're relaunching Lay's globally with a new repositioning you will see for the Super Bowl, based on freshness, based on farmers, simple ingredients, no artificials.

Speaker #2: We know that that is going to bring consumers to the brand. We're relaunching Tostitos. And as I mentioned, we're relaunching Gatorade, and we're relaunching Quaker.

Speaker #2: So big brands that need to continue to drive the machine. And then we're innovating in the periphery of the category where we're seeing growth.

Ramon Laguarta: And then we're innovating in the periphery of the category where we're seeing growth. And, you know, just to give you some examples, Naked was a good innovation for us, is going to be a permanent innovation for us. And what it taught us is that there are consumers out there that are looking for us to give them excuses to come into the category. And these are mainly younger households, moms that are love our products, but they want it, in this case, the case of Naked, like, no artificials. So, now the actual claim is, now I can give my children my favorites because it has no artificials.

And then we're innovating in the periphery of the category where we're seeing growth. And, you know, just to give you some examples, Naked was a good innovation for us, is going to be a permanent innovation for us. And what it taught us is that there are consumers out there that are looking for us to give them excuses to come into the category. And these are mainly younger households, moms that are love our products, but they want it, in this case, the case of Naked, like, no artificials. So, now the actual claim is, now I can give my children my favorites because it has no artificials.

Speaker #2: And just to give you some examples, Naked was a good innovation for us, is going to be a permanent innovation for us. And what it taught us is that there are consumers out there that are looking for us to give them excuses to come into the category.

Speaker #2: And these are mainly younger, households, moms that are love our products, but they want it in this case, the case of Naked, like no artificials.

Speaker #2: So now the actual claim is, now I can give my children my favorites because it has no artificials. So we're thinking about innovation from a category building point of view, bringing more consumers into the category, and obviously driving frequency of the category as I discussed earlier with the affordability investments.

Ramon Laguarta: So we're thinking about innovation from a category building point of view, bringing more consumers into the category, and obviously driving frequency of the category, as I discussed earlier with the affordability investments. The same in beverages. We're seeing the consumers willing to come into the category, we give them the right products. One of the big innovations we have in the plan for next year, for this year is Gatorade, low sugar, no artificials. Within this is going to be from the conversation with our customers, the space, the allocation, et cetera. It's gonna be a big, big, big innovation for us. Again, probably the same consumer looking for reasons to come into some of our large brands.

So we're thinking about innovation from a category building point of view, bringing more consumers into the category, and obviously driving frequency of the category, as I discussed earlier with the affordability investments. The same in beverages. We're seeing the consumers willing to come into the category, we give them the right products. One of the big innovations we have in the plan for next year, for this year is Gatorade, low sugar, no artificials. Within this is going to be from the conversation with our customers, the space, the allocation, et cetera. It's gonna be a big, big, big innovation for us. Again, probably the same consumer looking for reasons to come into some of our large brands.

Speaker #2: The same in beverages. We're seeing the consumers willing to come into the category. If we give them the right products, our big one of the big innovations we have in the plan for next year for this year is Gatorade, low sugar, no artificials.

Speaker #2: Within this, it's going to be from the conversation with our customers, the space, the allocation, etc. It's going to be a big innovation for us.

Speaker #2: Again, probably the same consumer looking for reasons to come into some of our large brands. We're very keen on some of the fiber innovation; we're very keen on some of the innovation with protein.

Ramon Laguarta: We're very keen on some of the fiber innovation. We're very keen on some of the innovation with protein. We are betting a lot on portion control. I think portion control is also a very big lever to keep consumers in the category and increase our frequency. So our multipack, both in foods and beverages, is going to be a very critical lever for us to grow. And I think we're getting better, more insightful, more granular in the combinations, the price points, and the different occasions where those packs can participate, and we know that they're driving category growth, and they're driving penetration of our brands.

We're very keen on some of the fiber innovation. We're very keen on some of the innovation with protein. We are betting a lot on portion control. I think portion control is also a very big lever to keep consumers in the category and increase our frequency. So our multipack, both in foods and beverages, is going to be a very critical lever for us to grow. And I think we're getting better, more insightful, more granular in the combinations, the price points, and the different occasions where those packs can participate, and we know that they're driving category growth, and they're driving penetration of our brands.

Speaker #2: We are betting a lot on portion control. I think portion control is also a very big lever to keep consumers in the category and increase our frequency.

Speaker #2: So our multi-pack, both in foods and beverages, is going to be a very critical lever for us to grow. And I think we're getting better, more insightful, more granular in the combinations and the price points and the different occasions.

Speaker #2: Where those packs can participate and we know that they're driving category growth and they're driving penetration of our brands.

Speaker #1: Thank you. One moment for our next question. Our next question comes from Kevin Grundy with BNP Paribas. Your line is

Operator: Thank you. One moment for our next question. Our next question comes from Kevin Grundy with BNP Paribas. Your line is open.

Speaker #3: Great. Good morning, everyone. Ramon, just picking up on that your comment a moment ago on healthier innovations, but I wanted to drill down specifically on GLP-1 adoption.

Kevin Grundy: Great. Good morning, everyone. Ramon, just picking up on that, your comment a moment ago on healthier innovations, but I want to drill down specifically on GLP-1 adoption, because it comes up a decent amount in terms of the pushback on what may keep certain investors out of your stock. So naturally, there remains a lot of concern. You have old tablets in the market, more insurance plans picking up weight loss drugs, et cetera. Can you... Not to be redundant, Ramon, with your comments from a moment ago, but maybe just address this GLP-1 concern head on. Were you able to address this in the test markets where you had success with the innovation you're rolling out and the price investment?

Speaker #3: Because it comes up a decent amount in terms of the pushback on what may keep certain investors out of your stock. So naturally, there remains a lot of concern.

Speaker #3: You have old tablets hitting the market, more insurance plans picking up weight loss drugs, etc. Can you—and not to be redundant, Ramon, with your comments from a moment ago—but maybe just address this GLP-1 concern head-on?

Speaker #3: Were you able to address this in the test markets where you had success with the innovation you're rolling out and the price investment? And do you feel like PepsiCo has a good handle on what higher adoption rates may look like in terms of implications for the category and for your outlook?

Kevin Grundy: Do you feel like PepsiCo has a good handle on what higher adoption rates may look like in terms of implications for the category and for your outlook? Your thoughts there would be appreciated. Thank you.

Do you feel like PepsiCo has a good handle on what higher adoption rates may look like in terms of implications for the category and for your outlook? Your thoughts there would be appreciated. Thank you.

Speaker #3: So your thoughts there would be

Speaker #3: appreciated. Thank you.

Speaker #2: Yeah,

Ramon Laguarta: Yeah, I think, I think we should. We should assume that there will be a broader adoption of GLP-1 medicines, you know, as you know, as those options evolve, and they, they're more affordable. So I think that should be an assumption now. We are reacting; we have been working on this for some time. There are multiple levers that we're using, and we're very optimistic on how PepsiCo can play in that new reality with the consumer. I think there are more opportunities than threats, but there are both. The way we're reacting is multiple. One, we believe portion control, and we've tested it, and we see that families with GLP, they continue to engage in our category, but they do it in smaller portions.

Speaker #2: I think we should. We should assume that there will be a broader adoption of GLP-1 medicines, as those options evolve and there are more affordable.

Speaker #2: So, I think that should be an assumption now. We are reacting. We have been working on this for some time. There are multiple levers that we're using, and we're very optimistic on how PepsiCo can play in that new reality with the consumer.

Speaker #2: I think there are more opportunities than threats, but there are both. The way we're reacting is multiple. One, we believe portion control and we've tested and we see that families will GLP; they continue to engage in our category, but they do it in smaller portions.

Speaker #2: So, the way to keep the category relevant is through smaller portions. If you think about our portfolio in the U.S., 70% plus of our food business is already in single-serve.

Ramon Laguarta: So the way to keep the category relevant is through smaller portions. If you think about our portfolio in the US, 70%+ of our food business is already in single serve, right? So we're investing in single serve capacity. We continue to provide consumer solutions for 1 ounce, 1.5 ounces, small portions that they can be through the consumer's life. Now, there are big opportunities for us, if you think about consumer habits when consumers are in GLP medication. The one is hydration. Big idea for us, big opportunities. We're relaunching Gatorade. Propel is growing 20+, powders, tablets, more functionality along with hydration, big idea. Fiber, we know those consumers are looking for fiber. They have some digestive, you know, problems.

So the way to keep the category relevant is through smaller portions. If you think about our portfolio in the US, 70%+ of our food business is already in single serve, right? So we're investing in single serve capacity. We continue to provide consumer solutions for 1 ounce, 1.5 ounces, small portions that they can be through the consumer's life. Now, there are big opportunities for us, if you think about consumer habits when consumers are in GLP medication. The one is hydration. Big idea for us, big opportunities. We're relaunching Gatorade. Propel is growing 20+, powders, tablets, more functionality along with hydration, big idea. Fiber, we know those consumers are looking for fiber. They have some digestive, you know, problems.

Speaker #2: Right? So we're investing in single-serve capacity. We continue to provide consumer solutions for one ounce, one and a half ounces—small portions that they can be through the consumer's life.

Speaker #2: Now, there are big opportunities for us if you think about consumer habits when consumers are on GLP medication. The one is hydration—big idea for us, big opportunities.

Speaker #2: We're relaunching Gatorade, propel is growing 20 plus. Powder is tablets, more functionality along with hydration, big idea. Fiber, we know those consumers are looking for fiber.

Speaker #2: They have some digestive problems. We can provide; we are innovating around fiber, whole grains. That's a big space. We're relaunching Quaker. Quaker will put emphasis on that space, but not only that, sun chips, and some of our food products as well.

Ramon Laguarta: We can provide, we are innovating around fiber, whole grains. That's a big space. We're relaunching Quaker. Quaker will put emphasis on that space, but not only that, SunChips, and some of our food products as well. Protein, obviously, that's an area where, you know, we've been innovating for some time, and we'll continue to do it. We're working on cooking methods, so our consumers like baked, they like pop. We're working on air frying. We're working on different technologies to make sure our products are cooked in a way that is more closer to what the consumers will prefer. So multiple vectors of transformation that we'll be sequencing with a sense of urgency.

We can provide, we are innovating around fiber, whole grains. That's a big space. We're relaunching Quaker. Quaker will put emphasis on that space, but not only that, SunChips, and some of our food products as well. Protein, obviously, that's an area where, you know, we've been innovating for some time, and we'll continue to do it. We're working on cooking methods, so our consumers like baked, they like pop. We're working on air frying. We're working on different technologies to make sure our products are cooked in a way that is more closer to what the consumers will prefer. So multiple vectors of transformation that we'll be sequencing with a sense of urgency.

Speaker #2: Protein, obviously, that's an area where we've been innovating for some time, and we'll continue to do it. We're working on cooking methods, so consumers like baked, they like pop.

Speaker #2: We're working on air frying. We're working on different technologies to make sure our products are cooked in a way that is more closer to what the consumers will prefer.

Speaker #2: So, multiple vectors of transformation. That will be sequencing with a sense of urgency; we did last year, we continue to do this year. But I think this could turn into an opportunity for us, and that's how we're approaching it, in the US, but not only the US.

Ramon Laguarta: We did last year, we continue to do this year, but I think this could turn into an opportunity for us, and that's how we're approaching it, in the US, but not only the US. This is going to be an opportunity for us in multiple markets.

We did last year, we continue to do this year, but I think this could turn into an opportunity for us, and that's how we're approaching it, in the US, but not only the US. This is going to be an opportunity for us in multiple markets.

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