PepsiCo (PEP) is doubling down on its snack business after years of declining volume growth.
On Thursday before the market open, the company beat low earnings estimates from Wall Street in its third quarter report. But the snacking slowdown continued in the US: North America food revenue fell 3%, and units sold declined 4%.
PepsiCo CEO Ramon Laguarta told Yahoo Finance that a major overhaul is underway.
“The situation in the US is accelerating top line,” Laguarta said in a phone interview. “We’re very aggressively taking costs out of the system, especially Frito-Lay. … It has been a very meaningful restructuring.”
This year, the company laid off 7,000 people from the Frito-Lay network, calling it “tough” but “something we had to do.” Laguarta said that, starting in May and extending into the fourth quarter, investors can expect “some additional planned closures and warehouse closures.”
In September, activist investor Elliott Management disclosed a $4 billion stake in the company, calling for a turnaround, especially in its snack business.
The company also faces pressure from RFK Jr.’s Make America Healthy Again (MAHA) initiatives.
Within the company’s prepared remarks, it shared plans to remove artificial flavors from snacks like Cheetos and Doritos. Also, it plans to expand the use of avocado oil and olive oil across its Lay’s brand — and a lean into its healthier snack brands like Simply, Sabra, Sun Chips, and Siete Foods, which the company acquired earlier this year.
In addition, new pack sizes are in the works, plus a Doritos protein chip and more offerings with fiber, whole grains, and protein from brands like Quaker, Sun Chips, PopCorners, and Smartfood.
Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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