By Isnaini Azizah 
PepsiCo on Thursday reported quarterly earnings and revenue that topped analysts’ expectations as its struggling North American food business reported a return to volume growth, signaling a potential turning point for the snack and beverage giant after years of inflation-driven consumer fatigue. The multinational food and beverage leader saw its shares rise 2% in afternoon trading following the announcement, reflecting investor confidence in the company’s ability to navigate a complex macroeconomic landscape and recalibrate its pricing strategy to win back price-sensitive shoppers.
For the first quarter ending in March 2026, PepsiCo posted net income attributable to the company of $2.33 billion, or $1.70 per share. This represents a significant increase from the $1.83 billion, or $1.33 per share, reported during the same period a year earlier. When excluding one-time items, including restructuring costs and various divestitures, the company reported adjusted earnings of $1.61 per share. Net sales for the quarter rose by 8.5% to reach $19.44 billion, a figure bolstered by strategic inorganic growth, including the high-profile acquisition of the prebiotic soda brand Poppi and a new distribution agreement for Alani Nu energy drinks. These gains were partially offset by the divestiture of the Rockstar energy brand. Pepsi’s organic revenue, a key metric that strips out the volatility of acquisitions, divestitures, and currency fluctuations, increased by a solid 2.6%.
The centerpiece of the quarterly report was the performance of PepsiCo’s North American food business. For the first time in more than two years, the division—which comprises the Frito-Lay North America and Quaker Oats units—reported an increase in volume. This recovery is a critical milestone for the company, as the division had previously struggled with declining demand. Throughout 2022 and 2023, PepsiCo, like many of its peers in the consumer packaged goods (CPG) sector, implemented aggressive price hikes to offset soaring input costs and supply chain disruptions. However, by late 2024 and 2025, these "hefty price rises" began to alienate the core consumer base, leading to "shrinkflation" complaints and a shift toward private-label alternatives.
To combat this trend, PepsiCo management executed a decisive pivot in February 2026. The company slashed prices on its most iconic brands, including Lay’s, Tostitos, Doritos, and Cheetos, by as much as 15%. This aggressive discounting was designed to stimulate volume growth and regain household penetration. The strategy appears to have resonated not only with consumers but also with retail partners. Many major retailers rewarded PepsiCo’s move toward affordability by granting the company more prominent shelf space and increased promotional support. The North American food business subsequently reported volume growth of 2% for the quarter, a metric that provides a more accurate reflection of consumer demand by excluding the noise of pricing adjustments and foreign exchange.
CEO Ramon Laguarta expressed optimism regarding the initial results of this strategic reset. During the company’s earnings conference call, Laguarta noted that the company is currently in the midst of "shelf resets" and is continuing to roll out new product innovations. "We feel good about where we are at this point in the journey," Laguarta told analysts. "By the end of the second quarter, we’d probably be almost completed in that process. But the early reads are quite exciting."
While the food business showed signs of a robust recovery, the North American beverage division faced a more challenging environment. Volume in this segment fell by 2.5% during the quarter. This decline highlights a persistent struggle for the company’s namesake soda brands, as well as its newer entries like Starry. Analysts suggest that while snack consumers may be more responsive to immediate price cuts, beverage consumption habits are being shaped by longer-term health trends and a crowded market for functional drinks.
In response to these headwinds, PepsiCo announced a major "restaging" of the Gatorade brand. Once the undisputed leader of the sports drink category, Gatorade has faced intensifying competition from upstart brands that emphasize hydration science and lifestyle marketing. PepsiCo’s plan for Gatorade involves a multifaceted approach: marketing the drink’s hydration benefits to a broader audience of non-athletes, launching a revamped lower-sugar version, and beginning the process of removing artificial colors from the product line. This shift reflects a broader industry movement toward "clean labels" and functional wellness.
Furthermore, PepsiCo is doubling down on "better-for-you" snack and drink trends that prioritize high protein and fiber content. Recent product launches, such as Pepsi Prebiotic, Starbucks Coffee & Protein, Doritos Protein, and SunChips Fiber, indicate a strategic attempt to bridge the gap between traditional indulgence and modern nutritional demands. By infusing legacy brands with functional benefits, PepsiCo aims to maintain its market share among Gen Z and Millennial consumers who are increasingly scrutinizing ingredient lists.
Beyond the borders of North America, PepsiCo’s international operations continue to be a primary engine for growth. The company’s international business is currently expanding at a faster clip than its domestic counterpart. Specifically, the food divisions in the Asia Pacific and the Europe, Middle East, and Africa (EMEA) regions both reported impressive volume growth of 9%. This international resilience is particularly noteworthy given the global economic pressures and fluctuating energy costs.
Addressing the broader macroeconomic environment, Laguarta noted that the company has not yet seen definitive signs of a consumer pullback in response to higher fuel prices, which have been exacerbated by ongoing global conflicts. Appearing on CNBC’s "Squawk on the Street," Laguarta provided a nuanced view of the impact of the U.S. conflict with Iran. He suggested that, in the short term, the geopolitical tension has actually served to boost sales in certain regional markets. He credited PepsiCo’s "strong supply chain" for this performance, noting that the company’s logistical infrastructure has allowed it to keep products in stock and maintain distribution efficiency while several of its competitors have struggled to adapt to the volatility.
Despite the quarterly beat, PepsiCo executives struck a cautious tone regarding the remainder of the fiscal year. The company reiterated its prior full-year forecast, projecting organic revenue growth between 2% and 4% and core constant currency earnings per share growth in the range of 4% to 6%. However, the company acknowledged that the global economy has become increasingly difficult to predict. "As we look ahead, the macroeconomic environment has become more volatile and uncertain because of ongoing geopolitical conflicts," executives stated in prepared remarks.
To mitigate the risks associated with this uncertainty, PepsiCo is relying on its systematic commodity hedging programs. These programs are intended to provide near-term protection against the price swings of essential raw materials and energy, offering some level of visibility on input costs in an otherwise opaque market. The company’s ability to manage these costs while simultaneously pursuing a strategy of targeted price reductions will be the defining challenge of 2026.
Industry analysts believe that PepsiCo’s recent performance underscores a broader trend in the consumer goods sector: the end of the "pricing-power era." For several years, companies were able to pass on nearly all cost increases to consumers without significant volume loss. That era has clearly concluded, forcing giants like PepsiCo to return to the fundamentals of brand innovation, logistical excellence, and price-to-value optimization.
As the second quarter progresses, all eyes will be on whether the 2% volume growth in North American snacks can be sustained and whether the "restaged" Gatorade can reclaim lost ground in the beverage aisle. For now, PepsiCo’s ability to pivot its strategy and exceed Wall Street’s expectations suggests that the company’s massive scale and diversified portfolio remain its greatest assets in a world of increasing geopolitical and economic instability. With the acquisition of Poppi and the expansion into protein-enriched snacks, PepsiCo is clearly signaling that it intends to lead the next evolution of the global pantry, even as it manages the complexities of a fragmented and volatile global marketplace.