PepsiCo, Inc.

PepsiCo is one of the world's largest food and beverage companies. In food it owns snack brands such as Lay's, Doritos, Cheetos, Tostitos and Smith's, and cereal brands such as Quaker. In beverages: Pepsi, Mountain Dew, Gatorade, Aquafina, SodaStream and, since 2025, poppi (a prebiotic soda). The company was originally incorporated in 1919, is headquartered in Purchase, New York, and employed about 306,000 people at the end of 2025.

Revenue splits roughly 55% food and 45% beverages. About 55% of revenue is generated in the United States and the rest in some 200 countries and territories. The company reports six segments: PepsiCo Foods North America, PepsiCo Beverages North America, International Beverages Franchise, Europe/Middle East/Africa, Latin America Foods and Asia Pacific Foods.

A core asset is the direct-store-delivery system: company employees or independent bottlers bring products to the store and merchandise them on the shelf. Ramon Laguarta is Chairman and CEO. There is no controlling shareholder.

Reading PepsiCo's reports requires separating two numbers. Reported profit under GAAP includes restructuring charges, impairments, mark-to-market on commodity derivatives and changes in acquisition contingent consideration. Core profit, the company's non-GAAP measure, excludes all of these. Last year impairments weighed heavily on reported profit, so this year's reported comparison looks especially strong: reported operating profit +45% for the 36 weeks. Core growth is 5%, and 3% in constant currency.

The June–September 2026 quarter

Net revenue rose 5.6% to $25,274 million: 3.1% organic growth (price and mix +3 points, volume +0.5 points), 1.7 points from 2025 acquisitions and 0.7 points from currency. Core operating profit rose 3% to $4,277 million and the core margin declined to 16.9% from 17.3%. The company states that the quarter included a 4-percentage-point favorable impact from tariff refunds, after the U.S. Supreme Court invalidated certain tariffs. The refund was not excluded from core results. On the cost side, core selling, general and administrative expenses rose 8%, faster than revenue, partly due to higher advertising.

Full-year guidance was revised down

In February, April and July the company reiterated guidance for 4% to 6% core constant-currency EPS growth. In October the range was revised to 1% to 2%, and to 2.5% to 3.5% for core EPS in dollars. In the same release the company lowered its core tax rate guidance from about 22% to about 21%. According to company management, it is acting with urgency to improve performance in North America, and additional structural cost actions will be identified and implemented in the coming months, partly to address rising input costs.

Looking at the last three years, core EPS was $8.16 in 2024 and $8.14 in 2025. The updated guidance translates to roughly $8.34 to $8.42 in 2026 (our calculation from the guidance percentages).

* The fourth quarter in North America has 16 weeks (the others 12), so it is not directly comparable. Q4 figures are calculated as full year minus 36 weeks.

At September 5, 2026, financial debt was $51,881 million ($9,223 million short-term, including $4.8 billion of commercial paper, and $42,658 million long-term). Cash and short-term investments: $11,163 million. Net debt: $40,718 million, about 2.1 times trailing 12-month core operating profit before depreciation and amortization (our calculation). About 20% of cash is held in Russia.

Cash flow and distributions. Free cash flow was $8,122, $7,531 and $8,200 million in 2023 to 2025. Dividends paid: $6,682, $7,229 and $7,638 million, plus $1 billion of share repurchases each year. In 2025 total distributions ($8,638 million) exceeded free cash flow by $438 million. For 2026, according to company management, distributions will total about $8.9 billion ($7.9 billion dividends and $1.0 billion repurchases), and free cash flow will be at least 80% of core net income.

Debt rose over two years. Total debt increased from $44,306 million at the end of 2024 to $49,182 million at the end of 2025 and $51,881 million in September 2026. Most of the 2025 increase funded acquisitions: Siete (about $1.25 billion), poppi (about $1.9 billion in cash) and a transaction with Celsius. In 2026 the company issued €2.5 billion of euro notes, and its $10 billion of credit facilities were undrawn.

poppi. In the acquisition the company committed to an additional $300 million payment if performance milestones are met by the third quarter of 2027. The carrying amount of that liability fell from $278 million at the end of 2025 to $12 million in September 2026. According to the note, its measurement relies on revenue and margin forecasts for the brand. The brand itself is carried at $1.7 billion; the annual impairment test performed in the quarter resulted in no impairment.

The quarter shows two opposite trends. In North America, core operating profit of the two segments combined fell about 6% ($2,394 vs $2,545 million). In the four international segments it rose about 16% ($2,309 vs $1,998 million). For the first time in the period reviewed, international profit is nearly equal to North American profit (our calculation from segment data).

PepsiCo Foods North America is the most profitable segment. Revenue was flat: volume rose slightly (savory snacks +1%) while effective net pricing fell one point, partly due to affordability initiatives. According to the company, the profit decline reflects certain operating cost increases, a prior-year base of gains on asset sales (4 points) and higher commodity costs (4 points). In PepsiCo Beverages North America the reported growth (5%) came from acquisitions; organic growth was zero and volume fell 2%. The segment's profit benefited from a 23-point net impact of tariffs, including refunds. In Latin America, 9 points of profit growth were currency (the Mexican peso) and 6 points were indirect tax credits in Brazil.

PepsiCo's position rests on three components: brands with broad shelf presence (especially in snacks), direct-store delivery that gives control over the shelf and the pace of innovation, and an international footprint in developing markets such as India, Mexico, Brazil and the Middle East. In the latest quarter, according to the company, volume market share in North American savory snacks increased. The company does not publish the figure.

What the reports show on the other side: to regain volume in North America the company lowered prices, and the PepsiCo Foods North America margin fell about 3 points. In its annual report it lists among risk factors GLP-1 weight-loss drugs, changes to U.S. food-assistance programs, consumer shifts to private label, and taxes and regulation on sugar, sodium and fat. In beverages it also distributes other companies' brands (Celsius, Alani Nu, Dr Pepper) in certain channels. This review does not include a quantitative competitor comparison from primary sources.

Risks arising from the filings

• Margin erosion in PepsiCo Foods North America: price reductions, operating cost increases not detailed in the filing, and commodity prices.
• Input inflation and tariffs: according to the company, input costs are rising, and the U.S. administration has imposed new tariffs after the court ruling.
• Consumption habits and regulation: weight-loss drugs, sugar and sodium taxes, ingredient and packaging restrictions, and changes to food-assistance programs.
• Leverage: net debt of about $40.7 billion, short-term debt of $9.2 billion and a current ratio of 0.94.
• Geographic exposure: Russia (about 6% of revenue and about 20% of cash), high-inflation countries, and currency swings.
• Acquisitions: the poppi additional-payment liability fell almost to zero on lower forecasts; the brand is carried at $1.7 billion.

Items to monitor for the annual report (February 2027)