PepsiCo cut prices on Doritos, Cheetos after customer complaints about affordability

By Tomi Kilgore and Bill Peters

Executives highlight efforts to offer more protein, fiber and smaller portions, amid rise of GLP-1 weight-loss drugs

PepsiCo's stock rallied toward a 13-month high, after an earnings beat and dividend hike.

PepsiCo on Tuesday reported fourth-quarter earnings that rose above expectations and kept his full-year revenue growth outlook intact, as it tries to keep a lid on prices to compete with its beverage-and-snack rivals and increasingly popular weight-loss drugs.

The company also boosted its dividend and announced a new $10 billion buyback program. Shares of PepsiCo (PEP) jumped 3.7% in recent afternoon trading, to put it on track to close at a 13-month high.

Volume, or the number of products sold, declined from a year ago, as weakness in its food business offset gains in beverages during the fourth quarter. Although overall pricing increased, enough to more than offset the volume decline, the company said it lowered some prices in its North America foods business to fend off competition and encourage shoppers to purchase its drinks and snacks more often.

In prepared remarks released ahead of the company's post-earnings call with analysts, PepsiCo executives said it started offering "greater affordability" on its iconic brands, such as Lay's, Doritos, Cheetos and Tostitos. The lower pricing followed consumer feedback around affordability, and after another quarter of volume declines in the North America convenient foods business, which includes those brands along with Quaker, and things like dips and granola bars.

Net income rose 67% from a year ago to $2.54 billion during the quarter, and core earnings per share, which excludes nonrecurring items, increased to $2.26 from $1.96, beating the average analyst EPS estimate compiled by FactSet of $2.24. That snapped a three-quarter streak of core EPS declines.

Revenue grew 5.6% to $29.34 billion, above the FactSet consensus of $28.98 billion, as effective net pricing increased 4.5% while volume declined 2%.

Among PepsiCo's business segments, revenue from foods in the North America region rose 1.5% and beverages were up 4%. Revenue from both Latin America foods and Europe, Middle East and Africa (EMEA) saw double-digit percentage increases.

Looking ahead, the company said it still expects 2026 organic revenue growth, which excludes acquisitions, of between 2% and 4%, and maintains its growth guidance for core EPS of 5% to 7%.

New products will be offered this year aimed at improving competitiveness and volume growth, with an increased focus on more quality and simpler ingredients, and in areas of hydration, whole grains, protein and fiber. The company said it will help fund these initiatives with aggressive cost cuts in North America.

During PepsiCo's earnings call, executives called out the popularity of its Pepsi Prebiotic Cola, launched over the summer, which it says has less sugar, no artificial sweeteners and three grams of prebiotic fiber, and other efforts to highlight simple ingredients, in products from Lays, and low sugar, in beverages like Gatorade.

Chief Executive Ramon Laguarta also said that as more people use weight-loss drugs like Wegovy and Zepbound, the company was trying to offer some items in smaller portion sizes. He said PepsiCo was repositioning its Quaker brand line and items like Sun Chips to emphasize whole grains.

"Fiber, we know those consumers are looking for fiber," he said. They have some digestive problems," Laguarta said. "We are innovating around fiber, whole grains. That's a big space."

PepsiCo raised its dividend by 4% to $5.92 a share from $5.69 a share. At current stock prices, the new annual dividend implies a dividend yield of 3.68%, which compares with the current dividend yield for rival Coca-Cola (KO) of 2.65% and the implied yield for the S&P 500 index SPX, according to FactSet, of 1.16%.

The company also announced a new $10 billion share-repurchase program, which represents 4.5% of PepsiCo's market current capitalization of $220.14 billion. For 2026, the company expects to buy back $1 billion worth of shares.

PepsiCo's stock has gained 7.1% over the past 12 months. Coca-Cola shares have rallied 21.3% and the S&P 500 has advanced 14.6% over the same time.

-Tomi Kilgore -Bill Peters

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02-03-26 1414ET