PepsiCo Inc Q2 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Bonnie Herzog - Goldman Sachs - Analyst : <_ALACRA_META_ABSTRACT>All right, thank you. Good morning everyone. I guess I was hoping for some more color on your accelerated productivity initiatives and your efforts to ultimately rightsize your asset footprint. My sense is your business is built for faster growth. And as we're seeing growth moderate, I guess, you're understanding the need to shrink your asset base and attempt to mitigate the impact that you might be seeing from some deleverage moving forward. So first, could you quantify the productivity savings you're hoping to generate this year? And how much above the typical $1 billion run rate it will be? And then second, could you frame for us how you're balancing your reduced asset footprint with ultimately ensuring your business will still be built for growth over the medium and long term? And I guess, along those lines, how should we think about your long-term algo and realistic category growth? Thanks.

Question: Steve Powers - Deutsche Bank - Analyst : Great. Can you hear me?

Question: Steve Powers - Deutsche Bank - Analyst : Okay. Great. So if we stay on North America, but maybe pivot to the top line, both [PFNA, PVNA]. Your prepared remarks run through a number of initiatives that you have underway to leverage the capabilities that you just talked about in response to Bonnie's question to drive improved momentum. And I guess my question is, if there's a way to distill those initiatives down to maybe the top one, two or three things that you would say are the most critical, the most important to get right as we run through the back half of the year to drive improvement? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 17, 2025 / 12:15PM, PEP.OQ - Q2 2025 PepsiCo Inc Earnings Call And then, I guess, relatedly, what does success look like as we think about exiting the year in both those divisions? Where do you want to be? What does your outlook kind of assume that you will be in terms of the run rate exiting the year?

Question: Filippo Falorni - Citi - Analyst : Hi, good morning everyone. Ramon, I wanted to go back to one of your comments on the away from home, which is a bright spot, definitely in the results. Can you give us a sense of how big is away from home, both for the beverage side and the food side? And you called out in the PBNA, it was up high single digits in the quarter. Should we expect that to continue in the balance of the year? And maybe also a little bit longer term, what's the opportunity longer term for your way from home business?

Question: Dara Mohsenian - Morgan Stanley - Analyst : Hey, good morning, guys. So Jamie, I just wanted to maybe extend Bonnie's productivity question a bit to full year earnings. Can you just help us understand your visibility and the assumptions behind the acceleration in the back half of the year relative to the first half? It's a pretty large magnitude. Obviously, currency is a big swing factor that helps. But I imagine a lot of that is eaten up by tariffs. So just trying to understand your level of confidence there, what the key drivers are? Is it mainly productivity? Or are there other factors there? And then also just longer term, Ramon or Jamie, as you think about investing behind the business, I'm not hearing a ton about reinvestment on this call. So just, can you talk about the decision to sort of drop that to the bottom line versus reinvest behind the business? Obviously, some nice growth internationally, opportunity to continue to invest there. You're looking to drive better trends in North America, still below long-term goals from a top line standpoint. So just curious how reinvesting behind the business fits into your plans and the ability to accelerate organic sales growth as we look out beyond this year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 17, 2025 / 12:15PM, PEP.OQ - Q2 2025 PepsiCo Inc Earnings Call

Question: Lauren Lieberman - Barclays - Analyst : Great, thanks so much. I wanted to talk a little bit about portfolio transformation. And you've been pretty active on the permissibility side of things and you spoke about the Simply restage. I can tell you, I've seen a ton of more incremental merchandising and display for -- to the Simply lines in store. Yes, a lot. And I was just curious, I guess, first specifically how that's going, because I know that on Simply something that you've spoken about in the past is that the impediment was not having the products are making them available was, frankly, consumer engagement and interest in them. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 17, 2025 / 12:15PM, PEP.OQ - Q2 2025 PepsiCo Inc Earnings Call So I'm curious on what kind of uptake you're seeing on that front? And then also in the release, you had mentioned some upcoming innovation for Frito around fiber, and protein and other things in ingredient profile. And I was just curious if you've done anything in terms of like consumer testing? Because when I think about the brand equities, I would think an open question is whether or not some of your brands have the right to play, if you will, in a space like protein, in the space like fiber? And just how you're thinking through kind of the risk of diluting brand equity by stretching them too far?

Question: Michael Lavery - Piper Sandler - Analyst : Thank you. Good morning. Just maybe shifting gears a little bit to international. It's done quite nicely and -- just maybe you gave some color in the prepared remarks, obviously, but hoping you could maybe call out a couple of the key drivers? Just some of what's really driving working there? And then maybe if there's any watch-outs for the second half, or even opportunities for further acceleration you can flag and just unpack that a little bit for us?

Question: Peter Grom - UBS - Analyst : Thanks operator and good morning everyone. Ramon, I wanted to go back to your response to Steve's question on just what success looks like. And I think you mentioned potentially returning to the organic growth and kind of the low end of the algorithm. Can you maybe just give us a sense in terms of your level of confidence, or visibility, into getting to that today, where we sit today, versus maybe where we've been over the last kind of 12 months? It sounds like you're more confident today versus where we've been. I'm not sure if that's a fair statement or not. But if so, what kind of drives that improved confidence?

Question: Andrew Tellam - JP Morgan - Analyst : Thank you. Good morning, everyone. So Ramon, you spoke about permissible offerings. And I know how much effort the company has been putting into these offerings for a very long time. But you're getting to $2 billion out of like close to $27 billion to $30 billion in sales in North America for convenience foods. And assuming that includes also your acquisitions. Why do you think -- I mean, just as a step back, that why do you think the consumer -- the consumer is searching for healthy snack. The share of healthy snacks for you did not improve that much relative to what I think the consumer desire is. So perhaps in this high single-digit percentage of total, how can you kind of improve that as you go forward? And do you think is more of a form situation where you obviously have a massive market share, which, I mean, benefit to you? And obviously, kudos to that effort in chips. And then the consumer is more looking for different forms and perhaps the right to win. It's in forms like shakes, or nuts, or fruits, or protein bars that you may not have any. And if that's the case, why not leaning towards more of that and perhaps for acquisitions? So I just want to take a step back and think about strategically.

Question: Peter Galbo - Bank of America - Analyst : Hey, good morning, Ramone and Jamie. Thanks for the question. Ramon, just going back through your comments on kind of sequential improvement expected in the food business over the rest of the year, and maybe even into next year. Just maybe wanted to put that into context of Q3 in particular, as you kind of lap some of the promotional efforts from last year, the volume compare is a bit more difficult. So is it possible that we see maybe a step back in that volume trend before it reaccelerates or kind of how we should think about it there again over the course of the year?

Question: Kaumil Gajrawala - Jefferies - Analyst : Hey guys, good morning, Ramon, that was [quite the Ts] on the big launch in protein. There is anything you could add, I'm sure we'd all be interested? Is it an existing brand, new brand? Any context? And then on -- when I look at your comments in the opening remarks, many of the comments started with a focus on value as being responsible for this improvement in inflection. So can you maybe just talk about sort of the journey and offering more value where you feel you are? Is there more work to do are things reset into a place that you like?

Question: Robert Ottenstein - Evercore ISI - Analyst : Great, thank you very much. Just a couple of follow-up questions, if I may. Revisiting the international business, beverages did much better than food. Can you talk maybe about -- a little bit about the drivers of why the beverages did so well? You mentioned Sting, I think for the first time that I can remember. I know it's an energy drink that's big in Southeast Asia. I think you got it from the [Rockstar] transaction. So a little bit about your international strategy on the beverage side? And then a follow-up on the comments about North America and that integration. Is the integration that you're working on to such an extent that it would preclude any future consideration of refranchising? Or would that be an option in the future even with the integration?

Question: Chris Carey - Wells Fargo Securities - Analyst : Hi, good morning, everyone. I wanted to ask about PBNA. Well, actually, and just in the context of the global beverage business. The President made some comments last night about ingredient changes, or ingredient evolution in one of your competitors. And it got me thinking in a way is how flexible is the system to responding to ingredient changes? And I'm really asking is in the context of the prepared remarks, talked about removing artificial flavors from a number of ingredients from a number of food offerings. And it really got me thinking about the beverage side and where you see this portfolio today and that kind of evolution toward healthier cleaner ingredients, and kind of how you see your North America versus international businesses on that journey of x percent today, but we think we can be at x percent in the coming years, and whether our North America and international business. So really about the evolution of cleaner ingredients within your beverage portfolio and how flexible the system is to respond to those changing requirements? Thanks.

Question: Kevin Grundy - BNP Paribas - Analyst : Great. Thanks. Good morning, everyone. Thanks for taking the question. Ramon, I wanted to come back to North America beverages and energy drinks. It's an area we haven't spent a ton of time on, but it was certainly an area when you took over, you kind of do a line in the sand. I think if you'd agree with that characterization, so you wanted to see PepsiCo play in a more substantial way. I think Rockstar has probably proven to be a little bit more difficult to turn, kick start sort of same deal with Mountain Dew, and sort of difficulty gaining traction. So I'd like to get your updated thoughts on sort of overall satisfaction with the energy during strategy. Kind of how you see the role of CELSIUS potentially a lot of new, not asking to make any comments, of course, if you can't. But just looking out over the next three to five years, what would you share with investors? What would you share with the market success in energy drinks look like from a PepsiCo perspective? Thank you.