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Snacking Headwinds Persist: Can PepsiCo's Beverages Carry the Load?
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Key Takeaways
PEP's North America snacking business saw volume pressure, with PFNA organic revenues down 3% in 3Q25.
PEP leans on permissible snacks and cleaner-label offerings to counter price sensitivity and revive volumes.
PEP's beverage unit provided stability, with PBNA posting 2% organic growth on Pepsi Zero Sugar gains.
PepsiCo, Inc. (PEP - Free Report) is navigating persistent headwinds in its core snacking business, particularly in North America, where volume declines have weighed on the broader food operations. Weak consumer demand, coupled with shifting health-conscious trends, has dampened spending on traditional snacks.
PepsiCo Foods North America (“PFNA”) continues to operate in a challenging environment, with volumes remaining uncertain due to heightened price sensitivity and intense promotional activity across packaged foods. In third-quarter 2025, organic revenues for the PFNA segment declined 3%, while reported revenues were flat year over year. Such challenges have compelled management to reassess strategy, costs and portfolio mix to retain growth.
In response, the company is increasingly leaning on its permissible snack portfolio, which is positioned as better-for-you, featuring cleaner ingredients and functional benefits, as a potential lever to boost volumes and bring momentum within PFNA. PEP has a robust portfolio of permissible snacks in the United States and Zero Sugar across the world. In contrast, PepsiCo’s beverage unit provides a partial buffer, with resilience driven by select high-growth categories such as zero-sugar colas and functional hydration drinks.
In functional hydration, the company boasts a strong portfolio, with Propel, enhancers, and tablets experiencing rapid growth. With innovation being a central focus, PEP remains committed to developing new platforms to capture market segments. The company is rolling out a range of initiatives in the protein category, including the relaunch of Muscle Milk, Starbucks protein offerings, and morning-focused protein solutions. PepsiCo’s Beverages North America (“PBNA”) segment delivered a strong performance in third-quarter 2025, highlighted by 2% organic revenue growth as business momentum accelerated. Trademark Pepsi delivered both volume and net revenue growth, supported by double-digit gains in Pepsi Zero Sugar and successful marketing campaigns.
PepsiCo is strategically repositioning its beverage portfolio to align with the evolving health and wellness trends. Flavor platforms like Mountain Dew experienced renewed share momentum, with Baja Blast on track to exceed $1 billion in retail sales. The modern soda brand poppi also continued its rapid expansion, strengthening PEP’s leadership in functional and better-for-you beverages. While the beverage segment is expected to offer greater stability, investments in healthier snack offerings should further bolster growth.
PEP’s Peers: How are They Doing?
The Coca-Cola Company (KO - Free Report) and Monster Beverage Corp. (MNST - Free Report) are the key companies competing with PepsiCo.
Coca-Cola’s effective strategy has demonstrated strong resilience through its diversified global portfolio, enabling it to navigate market volatility while sustaining growth across regions and beverage categories. KO’s portfolio spans sparkling soft drinks, water and sports beverages, juices, dairy and plant-based products, ready-to-drink tea and coffee, and energy drinks. This diversified non-alcoholic beverage lineup allows Coca-Cola to address varied consumer needs and price points across global markets. KO’s continued emphasis on innovation, digital transformation and marketing excellence has further strengthened its competitive position.
Monster Beverage’s portfolio is primarily focused on the energy drink category, anchored by its flagship Monster Energy brand. MNST continues to innovate with new flavors and health-oriented products while optimizing its supply chain and implementing strategic pricing actions to aid growth. Monster Beverage’s productivity efforts, bolstered by product innovations and launches, offer a competitive edge and boost growth in the energy drinks market.
PEP’s Price Performance, Valuation and Estimates
Shares of PepsiCo have gained 3.3% in the past six months compared with the industry’s growth of 3%.
Image Source: Zacks Investment Research
From a valuation standpoint, PEP trades at a forward price-to-earnings ratio of 17.05X compared with the industry’s average of 18.19X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PEP’s 2025 earnings per share (EPS) implies a year-over-year drop of 0.5% while that of 2026 EPS shows 5.4% growth. The estimates for 2025 and 2026 have been stable in the past 30 days.
Image Source: Zacks Investment Research
PepsiCo stock currently carries a Zacks Rank #4 (Sell).
Image: Bigstock
Snacking Headwinds Persist: Can PepsiCo's Beverages Carry the Load?
Key Takeaways
PepsiCo, Inc. (PEP - Free Report) is navigating persistent headwinds in its core snacking business, particularly in North America, where volume declines have weighed on the broader food operations. Weak consumer demand, coupled with shifting health-conscious trends, has dampened spending on traditional snacks.
PepsiCo Foods North America (“PFNA”) continues to operate in a challenging environment, with volumes remaining uncertain due to heightened price sensitivity and intense promotional activity across packaged foods. In third-quarter 2025, organic revenues for the PFNA segment declined 3%, while reported revenues were flat year over year. Such challenges have compelled management to reassess strategy, costs and portfolio mix to retain growth.
In response, the company is increasingly leaning on its permissible snack portfolio, which is positioned as better-for-you, featuring cleaner ingredients and functional benefits, as a potential lever to boost volumes and bring momentum within PFNA. PEP has a robust portfolio of permissible snacks in the United States and Zero Sugar across the world. In contrast, PepsiCo’s beverage unit provides a partial buffer, with resilience driven by select high-growth categories such as zero-sugar colas and functional hydration drinks.
In functional hydration, the company boasts a strong portfolio, with Propel, enhancers, and tablets experiencing rapid growth. With innovation being a central focus, PEP remains committed to developing new platforms to capture market segments. The company is rolling out a range of initiatives in the protein category, including the relaunch of Muscle Milk, Starbucks protein offerings, and morning-focused protein solutions. PepsiCo’s Beverages North America (“PBNA”) segment delivered a strong performance in third-quarter 2025, highlighted by 2% organic revenue growth as business momentum accelerated. Trademark Pepsi delivered both volume and net revenue growth, supported by double-digit gains in Pepsi Zero Sugar and successful marketing campaigns.
PepsiCo is strategically repositioning its beverage portfolio to align with the evolving health and wellness trends. Flavor platforms like Mountain Dew experienced renewed share momentum, with Baja Blast on track to exceed $1 billion in retail sales. The modern soda brand poppi also continued its rapid expansion, strengthening PEP’s leadership in functional and better-for-you beverages. While the beverage segment is expected to offer greater stability, investments in healthier snack offerings should further bolster growth.
PEP’s Peers: How are They Doing?
The Coca-Cola Company (KO - Free Report) and Monster Beverage Corp. (MNST - Free Report) are the key companies competing with PepsiCo.
Coca-Cola’s effective strategy has demonstrated strong resilience through its diversified global portfolio, enabling it to navigate market volatility while sustaining growth across regions and beverage categories. KO’s portfolio spans sparkling soft drinks, water and sports beverages, juices, dairy and plant-based products, ready-to-drink tea and coffee, and energy drinks. This diversified non-alcoholic beverage lineup allows Coca-Cola to address varied consumer needs and price points across global markets. KO’s continued emphasis on innovation, digital transformation and marketing excellence has further strengthened its competitive position.
Monster Beverage’s portfolio is primarily focused on the energy drink category, anchored by its flagship Monster Energy brand. MNST continues to innovate with new flavors and health-oriented products while optimizing its supply chain and implementing strategic pricing actions to aid growth. Monster Beverage’s productivity efforts, bolstered by product innovations and launches, offer a competitive edge and boost growth in the energy drinks market.
PEP’s Price Performance, Valuation and Estimates
Shares of PepsiCo have gained 3.3% in the past six months compared with the industry’s growth of 3%.
Image Source: Zacks Investment Research
From a valuation standpoint, PEP trades at a forward price-to-earnings ratio of 17.05X compared with the industry’s average of 18.19X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PEP’s 2025 earnings per share (EPS) implies a year-over-year drop of 0.5% while that of 2026 EPS shows 5.4% growth. The estimates for 2025 and 2026 have been stable in the past 30 days.
Image Source: Zacks Investment Research
PepsiCo stock currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.