PepsiCo, Inc. Q1 FY2026 earnings call

1. Acceleration of affordability initiatives in first half of 2026, with three key points: playing offense, expecting volume and sales growth benefits, and the investment being manageable for the business. 2. Multi-vector strategy to drive category growth, including testing affordability measures in key markets with good ROI, space gains through customer partnerships, and investment in innovation for functionality and simpler ingredients. 3. Expect Frito-Lay to grow volume, net revenue, and operating margin in 2026, with volume and net revenue growth early in the year, and double-digit space gains in Frito-Lay from March - April. 4. Restaging of big brands like Lay's, Tostitos, Gatorade, and Quaker. 5. International business expected to continue mid - single digit growth. 6. Beverage business expected to have acceleration, with food business showing improvement in volume and net revenue. 7. Innovation in various areas including portion control, fiber, protein, and hydration, with examples like NAKED, Gatorade low sugar, and multi - packs in foods and beverages. 8. Reaction to GLP - 1 adoption with multiple levers such as focus on portion control, hydration, fiber, protein, and cooking methods. 9. Double - digit shelf space gains in multiple parts of the store as a result of increased units from affordability measures. 10. Holistic relaunch of big brands with changes in visuals, ingredients, and marketing investment. 11. Focus on increasing competitiveness of the beverage business, with progress in energy portfolio including Celsius and Alani new, and plans to improve margins. 12. Testing of merging food and beverage distribution in Texas and Florida, with insights on integrated delivery and inventory points, and plans to scale solutions and consider regional nuances.

1. Expect sales to strengthen in the second half of 2026 as initiatives gain traction and acquisitions move into organic growth. 2. EPS expected to be pretty balanced from first half to second half. 3. International business expected to continue mid - single digit growth. 4. Beverage business expected to have acceleration, with food business showing improvement. 5. Guidance is continuistic based on Q4 data, with assumptions about macro conditions in major markets like Mexico, China, Middle East, Western Europe, and Brazil.

Q: Bonnie Herzog with Goldman Sachs asked about accelerating affordability initiatives, what's been working, price point fall, and balancing growth and profitability for PFMA.

A: Steve and Ramon responded that it's an offensive play, expecting volume and sales growth benefits, the investment is manageable, productivity helps fund initiatives, it's a multi - vector strategy with testing at scale, space gains from customer partnerships, and investment in innovation.

Q: Andrew Teixeira with JPMorgan commented on pricing reinvestment, tools to mitigate, volume trajectory.

A: Steve said Frito - Lay is expected to grow volume, net revenue, and operating margin, growth early in the year, pricing investment is surgical, double - digit space gains in Frito - Lay from March - April, and sales growth to strengthen in second half with initiatives gaining traction.

Q: Darren with Morgan Stanley asked for more detail on affordability focus and payback of actions.

A: It's surgical, well - tested at scale with good ROI, volume return is good.

Q: Lauren Lieberman with Barclays asked about advertising decline in 2025 and thoughts for 2026.

A: Steve said there was efficiency from advertising lines, and 2026 will be growth - minded with investment in sales growth.

Q: Filippo Filoni with Citi asked about drivers of organic sales acceleration in 2026.

A: Ramon said international business expected mid - single digit growth, acceleration from North America businesses, beverage business expected to continue acceleration, food business showing improvement, and acquisitions contributing to organic growth.

Q: Peter Grom with UBS asked about innovation in North America.

A: Ramon said focus on core brands' relaunch and innovation in category periphery, examples like NAKED, Gatorade low sugar, and multi - packs.

Q: Kevin Grundy with BNP Paribas asked about GLP - 1 adoption.

A: Ramon said assume broader adoption, reacting with multiple levers like portion control, hydration, fiber, protein, and cooking methods.

Q: Camille Gargiola with Jefferies asked for more details on double - digit shelf space gains.

A: Ramon said it's from partnership with customers, in main shelf and perimeter, due to increased units from affordability measures.

Q: Michael Lavery with Piper Sadler asked about biggest brands' innovation.

A: Ramon said holistic relaunch of brands like Lay's with changes in visuals, ingredients, and marketing investment.

Q: Steve Powers with Deutsche Bank asked about TV&A segment and energy portfolio.

A: Ramon said focus on increasing competitiveness of beverage business, progress in energy portfolio with Celsius and Alani new, and plans to improve margins.

Q: Peter Galbo with Bank of America asked about M&A lapping into organic.

A: Steve said poppy flips into organic in March, Alani new towards end of year, and it should help organic growth.

Q: Chris Carey with Wells Fargo Securities asked about brand Pepsi's 2025 success and Mountain Dew's reinvigoration.

A: Ramon said Pepsi is doing well with no sugar product and advertising, Mountain Dew is making progress with local marketing and innovation.

Q: Robert Muscat with TD Cowan asked about food and beverage distribution tests in Texas and Florida.

A: Ramon said there are good insights in integrated delivery and inventory points, plans to scale solutions and consider regional nuances.

Q: Robert Odstein with Evercore ISI asked about macro backdrop and impact on guidance.

A: Ramon said guidance is continuistic based on Q4 data, with assumptions about macro conditions in major markets.