Brands
PepsiCo banks on India as North America demand loses fizz
India fuels growth as snack volumes stay flat and beverages fall 4 per cent in North America
MUMBAI: The fizz may still be there, but consumers are no longer rushing to crack open their wallets. PepsiCo is increasingly leaning on fast-growing markets such as India after weakening demand in North America underscored the pressure inflation and higher living costs continue to place on household spending.
The food and beverage giant reported a softer-than-expected second quarter in North America, with consumers pulling back on discretionary purchases, including packaged snacks and carbonated drinks. Chairman and CEO Ramon Laguarta said shoppers are prioritising essential spending as persistent inflation continues to squeeze household budgets.
The slowdown came despite PepsiCo cutting prices by up to 15 per cent earlier this year on mid-sized packs of brands including Lay’s, Doritos, Cheetos and Tostitos, reversing several years of price increases. While the move helped lift demand during the first quarter, momentum faded in the April-June period.
North American snack volumes remained flat, while beverage volumes declined 4 per cent during the quarter. PepsiCo also pointed to higher fuel prices as another factor weighing on consumer spending.
Not all categories lost their bite. Portion-controlled multipacks continued to perform well, while healthier snack brands such as Simply, SunChips, Siete and Quaker Rice Cakes gained traction. Demand also remained strong for low- and no-sugar drinks, including Pepsi Zero Sugar and Mountain Dew Zero Sugar.
Outside North America, however, the story was markedly different. International snack volumes rose 3 per cent, while beverage volumes increased 2 per cent, helping PepsiCo deliver its fastest global organic volume growth since 2022.
Among the standout performers was India, which emerged as one of PepsiCo’s strongest growth markets during the quarter. According to a Moneycontrol report, both the company’s food and beverage businesses posted robust momentum, supported by rising consumption, wider distribution and growing demand across packaged food and beverage categories.
The contrasting performance highlights an increasingly familiar trend for global consumer goods companies. While mature markets such as North America grapple with inflation, cautious spending and slower demand, emerging markets like India continue to offer stronger growth prospects, driven by favourable demographics, urbanisation and rising incomes.
Despite the weaker home-market performance, PepsiCo has maintained its full-year outlook, expecting conditions to improve in the second half of 2026. However, Chief Financial Officer Steve Schmitt cautioned that the recovery in North America could take longer than previously anticipated following the softer second-quarter performance.
