REUTERS — PepsiCo beat Wall Street expectations for first-quarter revenue and profit as demand for its sodas and snacks such as Cheetos and Doritos in international markets drove growth even as it witnessed a slowdown in the United States.
Consumers across Europe, Asia Pacific and China shelled out money for PepsiCo’s pricey sodas and chips, while customers in the U.S. cut back on the products due to strained budgets.
“We’ve had three years of … massive consumer inflation and that has to be absorbed, and I think the cumulative impact of that put a bit of strain on the consumer, but we expect that to abate as time goes on,” PepsiCo chief financial officer Jamie Caulfield said.
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The company’s average prices jumped five per cent in the first quarter. Its organic volume slipped two per cent compared to a four per cent drop in the fourth quarter.
International business accounted for about 40 per cent of PepsiCo’s fiscal 2023 revenue, while its North American businesses accounted for the remainder.
PepsiCo has been expanding its portfolio in developed and emerging markets to drive demand by launching items such as flavoured Quaker instant oats and the Celsius energy drink, chief executive officer Ramon Laguarta said.
First-quarter sales at PepsiCo’s largest business, its North American beverage unit, rose one per cent, while organic volume fell five per cent.
Total sales at its Quaker Foods North American unit fell 24 per cent following Quaker product recalls first made in December in the U.S. due to a potential salmonella contamination.
PepsiCo expects its North America businesses to gradually improve as impacts associated with product recalls moderate.
The company’s first-quarter net revenue rose 2.3 percent to $18.25 billion, beating estimates of $18.07 billion.
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