Oct 8, 2026 earnings call — Fixing North America growth and margins
Organic net revenue accelerated to 3.1% in Q3, the fastest rate since Q4 2023.
Revenue $25.3B (est $25.0B) · EPS $2.34 (est $2.29)
Key quotes
"The volume bet that we made in snacks North America, especially with the price reset, we are happy with the turnaround in the volume performance."
"Overall, international had really a stellar quarter. Organic revenue increased 8%, operating margin expanded 105 basis points."
"The largest changes, and you mentioned, we said in our prepared remarks, was margin performance is below where we expected it to be. Input costs are trending higher, and mix has been a headwind in particular."
Analyst Q&A 10
revenue growth and margin outlook
Q (Dara Mohsenian · Morgan Stanley): Asked about sustainability of strong international growth, North America revenue and pricing plans, and drivers of the Q4 margin revision and implications for 2027.
A: Management said international was strong and volume-led, but margin performance moved below expectations due to higher input costs and mix headwinds. They will sustain and increase A&M investments, identify structural cost reductions, and use revenue management tools to mitigate margin pressure. They said they will give more detail on 2027 plans in February.
"The largest changes, and you mentioned, we said in our prepared remarks, was margin performance is below where we expected it to be." — Steve Schmitt (CFO)
portfolio and SKU rationalization
Q (Bonnie Herzog · Goldman Sachs): Asked whether PepsiCo would accelerate SKU rationalization in North American foods and how they view the current portfolio and possible M&A to reignite growth.
A: Management described two growth vectors: value/affordability and building a portfolio of the future through new platforms and formats. They highlighted portion-control packs and permissibles, listed brands like SunChips and Smartfood, and said they will consider small, strategic tuck-in M&A while investing to scale growth platforms.
"We think that 100-calorie packs, 120-calorie packs, that is critical for the future." — Ramon Laguarta (CEO·CHAIR)
North America soft drinks and outlook
Q (Peter Grom · UBS): Asked why North America performance, especially carbonated soft drinks, fell short and what they will do differently; also asked whether organic sales should improve sequentially into Q4.
A: They said they expect sequential improvement into Q4 and into next year and will continue to invest to accelerate top-line growth. They noted hydration and energy are growing, but soft drinks are underperforming, so they plan to increase brand investment and improve execution with bottling partners.
"I think we're expecting sequential improvement as we go into Q4 and especially as we go into next year." — Ramon Laguarta (CEO·CHAIR)
margin drivers and A&M ROI
Q (Lauren Lieberman · Barclays): Asked how much margin pressure comes from incremental investment versus unexpected inflation and whether the A&M spending needs a bigger strategic rethink.
A: They said hedges have shielded costs but are rolling off, so input costs are ramping and tariff benefits are fading, which pressures margins. They will continue A&M investment but also cut non-growth costs and improve A&M quality, citing a new partnership with Publicis to get better returns.
"I think quantity, we are looking at every cost in the company and making sure that any cost that is not linked to growth is not there, including overheads, including corporate unallocated, including any line that you can think of." — Ramon Laguarta (CEO·CHAIR)
pricing direction and urgency
Q (Kaumil Gajrawala · Jefferies): Asked which way North America foods pricing is headed and what 'urgency' means for the beverage business.
A: They said urgency means aggressively reviewing costs and removing anything not tied to growth, then reallocating funds to brands and raising execution standards. On pricing, they said the snack price reset helped turn volume positive, they will use net revenue management and productivity to offset inflation, and they set a guardrail that next year's pricing should be below $25.
"We're putting some guardrails to our people, making sure that next year's pricing is going to be below $25, so we continue to be very affordable in most of the take-home parts of the business." — Ramon Laguarta (CEO·CHAIR)
big strategic options (splits, refranchising)
Q (Kevin Grundy · BNP Paribas): Asked whether the Board is considering bigger structural moves like splitting businesses, separating snacks and beverages, divestitures, or refranchising to unlock value.
A: They said they are open to revisiting every option and are working to accelerate tactics that remove cost. They are evaluating expanding refranchising in parts of the country where partners can drive better execution, and will make strategic decisions with urgency and a mid-to-long-term view.
"So yes, we're looking at everything and these are important decisions that we'll be making with a sense of urgency and with the strategic midterm, long-term vision that we always run the company with." — Ramon Laguarta (CEO·CHAIR)
integrating food and beverage; Carlsberg learnings
Q (Robert Ottenstein · Evercore): Asked for an update on integrating U.S. food and beverage (One North America pilot) and what they learned from working with Carlsberg internationally.
A: They said partnerships with beer companies like Carlsberg extend existing bottle-partner strategies, help on-premise presence, and have worked well in markets like the U.K. On One North America, they said the physical integration of warehouses and transportation is working well and the team is now focused on delivery details to customers, using a hybrid approach by geography.
"The integration is working well on the physical side with warehouses and the transportation." — Ramon Laguarta (CEO·CHAIR)
measuring refranchising and One Pepsi progress
Q (Andrea Teixeira · JPMorgan): Asked how to think about measuring success, timing, and potential savings from revisiting refranchising and One Pepsi, and how a hybrid system might work.
A: They said the company has high urgency and is reviewing costs and execution closely. They will use a mix of solutions by geography, focused on growth, marketplace execution, and margin, and will decide on the right mix when the time comes.
"If you think about growth, margin, and long-term marketplace performance, we're looking at execution as an important lever." — Ramon Laguarta (CEO·CHAIR)
beverage pricing approach and volume
Q (Michael Lavery · Piper Sandler): Asked how they will balance pricing in North America beverages given higher input costs while trying to compete and protect volume.
A: They said they will use a mix of net revenue tactics to give value in the right occasions and moments, while aggressively pursuing productivity through automation, digitalization, standardization, and some asset divesting. They will pivot savings into growth to stay affordable and capture net revenue opportunities.
"I think there will be a mix of tactics on net revenue, trying to provide as much value as possible to consumers in the right occasions and the right moments with the right brands." — Ramon Laguarta (CEO·CHAIR)
inflation outlook and hedging timing
Q (Peter Galbo · BofA): Asked how much inflation expectation moved up for Q4 and whether hedges rolling off implies more pressure in early next year.
A: They said commodities are ramping up as hedges roll off and their hedging program is typically 6-12 months. They will give a more complete view in February, but as a general trend commodities continue to ramp up.
"We'll give you a more complete view on how that all comes together in February, but as a general trend, commodities continue to ramp up." — Steve Schmitt (CFO)