PepsiCo Inc Q3 2025 Earnings Call Transcript

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

Question: Bonnie Herzog - Goldman Sachs - Analyst : All right, thank you. Good morning, everyone. I had a question on the volume pressures you continue to face in both your food and beverage businesses. I guess, could you give us a sense of how much this is being impacted by your pivot to smaller pack sizes, maybe versus category trends softening or potential market share losses? Essentially, how should we think about these volume declines? And then how should we think about volume growth moving forward? Is it realistic to assume that volumes could start to inflect, especially considering the robust innovation pipeline you've highlighted this morning? Thanks.

Question: Dara Mohsenian - Morgan Stanley - Analyst : Hey, good morning. So the commentary was helpful on top line growth. I guess just looking out more to 2026 and longer term, obviously, a lot of work is underway to reinvigorate top line growth, clearly, the heightened innovation focus, focused on permissible or more functional benefits in terms of products, portfolio reshaping, price pack architecture, away from home, et cetera, et cetera. So just when you bring it all together, Ramon, which areas do you think are most impactful as we think about potentially accelerating revenue growth in 2026? Can you give us a little more specificity on when you think we'll start to see material progress on that front? And do you think there's a line of sight to returning potentially the long-term top line growth, your long-term algo at some point within 2026, just when you wrap all these efforts together. Thanks.

Question: Lauren Lieberman - Barclays - Analyst : Great, thanks so much. Good morning. I wanted to talk a little bit or ask a little bit about the cost associated with a lot of these innovations in the plus protein, better for you, cleaner labels, et cetera, that you run through. Would think that these come at a higher cost of goods? I know you've talked a lot about cost savings as well, but I think you're going to want to reinvest. So you talk a little bit about margin structure, or how to think about the cost implications of taking the portfolio and your big core brands in this direction. And also what you do to make sure there's sufficient brand support for these launches, particularly as we look into '26. Thanks.

Question: Steve Powers - Deutsche Bank - Analyst : Great, thank you, everybody. We're going to picking up on that thread with respect to productivity. Could you just give a little bit more detail on where the interventions are specifically in PFNA that you're making to right size that kind of fixed cost structure. And how far along you think you'll be at the end of '25. Do you think you'll have rightsized that business relative to the current demand signal, or is there more work to do in '26? And if I could, one of the things that I didn't see in today's remarks or release is any difference to One North America, which obviously was a big point of focus last quarter. So maybe you could talk about if that emission was intentional or just kind of where we are with One North America as well. Thank you.

Question: Filippo Falorni - Citi - Analyst : Hi, good morning, everyone. I want to talk about the international business. Ramon, you mentioned the quarter was negatively impacted by poor weather, but you saw a nice improvement in September, which is pretty encouraging. But some of your peers have talked about like some macro pressures in regions like Latin America, Asia Pacific include including India, maybe can you give us a sense of the health of the consumer in some of those countries? What are you seeing? And what gives you the confidence in the acceleration? Thank you.

Question: Michael Lavery - Piper Sandler - Analyst : Thank you. Good morning. Just want to come back to brand Pepsi, seeing it's better improvement -- it's better momentum and improvement in the US and even from a share performance perspective. And just curious, maybe some of what's been driving that? How much is it just a changing of the messaging or maybe an increase in marketing? And also when you talked about optimizing marketing spend as one of the ways to drive better ROI. Is there -- to the marketing spending that's planned, or do you believe you can be more efficient? Maybe help us understand just how to think about that language there as well.

Question: Peter Grom - UBS - Analyst : Thank you. Good morning, everyone. So I was hoping to follow up on the prior commentary. I think it was Bonnie's question. So I think you mentioned an expectation for PFNA to get back to kind of flat organic sales performance in the fourth quarter and that you actually saw the business return to growth in the last month. So just as you look at what happened over the last month, is that simply a function of what you were lapping? Or is it more related to the actions around innovation and everyday execution. It's just not something we've seen yet in the data. So just any color on what happened in the last month, has that drives the confidence on the path forward. Thanks.

Question: Andrea Teixeira - JPMorgan Chase & Co - Analyst : Thank you, and good morning, everyone. So my question is how to think about the headwinds of the SKU rationalization impacting your organic growth? And two clarifications, Ramon, for PFNA, can you comment on the results of the price reinvestments, in particular in the core brands at the entry-level price points? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 09, 2025 / 12:15PM, PEP.OQ - Q3 2025 PepsiCo Inc Earnings Call And then second, I think you and Subhani and Peter a bit on the volume inflection, is that a commentary in the -- you said volume inflected positive in the last four weeks. Is that for a total company or specific to some regions? I'm assuming specific to some regions in areas where you're seeing that service level coming back. So where are you seeing, if that's the case, where you're seeing the volume inflection? Thank you.

Question: Andrea Teixeira - JPMorgan Chase & Co - Analyst : Thank you. So for the PFNA, if you're thinking like the pricing investments that you made in some of the core brands and entry-level price points, can you comment on how those results have been coming up, or it's more coming from the permissible area of the business, how we should be thinking about the price investments you've been making for, I think, more than three quarters for now?

Question: Peter Galbo - Bank of America - Analyst : Hey, Ramon, Jamie, good morning. Ramon, one of the areas where you focused a lot on in the prepared remarks within PBNA what was on protein. And I guess I just want to understand a little bit more on the decision of kind of using the in-house brands like Muscle Milk or Propel to address protein in a bigger way versus other subcategories like energy or prebiotic where you've either bought or partnered. So maybe just if you can expand a little bit on kind of the decision to go more organic versus acquisition or partnership as we think about protein and beverages going forward. Thanks very much.

Question: Robert Ottenstein - Evercore ISI - Analyst : Great, thank you very much. So Ramon, kind of a two part question. The first part is you talk a lot about rightsizing the cost structure, aggressively attacking costs, but at the same time, getting back to algorithm, suggesting that perhaps the top line isn't the problem, but maybe it's the type of costs that you have, perhaps too many costs in the US, in certain assets in certain brands, but you're going to make up for that in growth internationally and then innovation in the US, which may require a more complex cost structure, maybe smaller runs, different sorts of supply chains and a whole different way of looking at the cost structure. So number one, is that assessment roughly right? And then connected to that, very big announcement on the CFO side. Congratulations to everybody. Could you talk a little bit about that decision to go outside of the firm to a very well-respected leader at your biggest customer, and how you see him driving through that vision? Thank you.

Question: Chris Carey - Wells Fargo Securities LLC - Analyst : Hey everyone. So yeah, most ground has been covered. So maybe just to take a step back, Ramon, I'd love to get your thoughts on something around cyclical versus structural, but really by geography. I think in North America, there's an ongoing debate about how much of this is the consumer shifting preferences toward healthier eating. Obviously, there's a cyclical component as well with value seeking. Can you compare the consumer behavior in the US, this cyclical versus structural dynamic versus what you see in the international markets. Is the consumer there behaving in similar ways, both from an economic perspective, number one, but also are the preferences for the international consumer outside the US, shifting and evolving like they are in the North America business. So I love getting any context or additional color on how you see that interplay. Thanks.

Question: Robert Moskow - TD Cowen - Analyst : Hi, thanks for the question. A few weeks ago, an activist investor announced a stake in your stock and published a long list of recommendations. So I wanted to know your willingness to engage with them. And if there's any ideas in there that you think are particularly important for your strategic direction. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 09, 2025 / 12:15PM, PEP.OQ - Q3 2025 PepsiCo Inc Earnings Call One in particular, I wanted to know is establishing a margin target for Frito-Lay, it's been discussed in the past. I just want to know, is that something that you consider constructive for setting a path for the future, or you just look at the business and what it needs to do differently than that? Thanks.