Pepsi reaffirmed its financial guidance for 2024, including organic revenue growth of 4%. The company has said it expects to return to more normal rates of growth this year after several years of inflation-driven price increases.
Revenue growth slowing
That may have disappointed investors who have grown used to stronger growth at PepsiCo. Last year organic revenue grew 9.5%, for example. PepsiCo’s shares fell more than 2.5% in morning trading Tuesday. In North America, Frito-Lay revenue rose 2% while Pepsi beverage sales were up 1%. Sales were hurt by a recall early in the quarter of Quaker Oats cereal, bars and snacks because of potential contamination with salmonella. Quaker Foods sales dropped 24% during the quarter. But the company saw 11% sales growth in Asia Pacific and 10% sales growth in Europe.
Consumer demand, employment still strong
PepsiCo Chairman and CEO Ramon Laguarta said the company is optimistic that consumer demand will continue to rise this year in the U.S. and elsewhere.
“The consumer, globally, we think is very resilient,” Laguarta said during a conference call with investors. “It’s basically supported by two facts: very low unemployment or quite low unemployment globally and wages growing at a good pace in the majority of the countries where we participate.” In Europe, sales were driven by demand in Eastern Europe, Laguarta said.
In Western Europe, consumers saw fewer PepsiCo snacks and drinks on grocery shelves during the quarter. Carrefour, one of Europe’s largest supermarket chains, announced in January that it was pulling PepsiCo products from stores in France, Belgium, Spain and Italy, due to unacceptable price increases. The two companies resolved their pricing dispute and Carrefour began restocking PepsiCo products in early April. The company said it also saw double-digit organic revenue growth in Mexico, Brazil, Egypt, Pakistan, China and Australia.
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