PepsiCo turnaround efforts face pressure as U.S. snacking demand weakens

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PepsiCo turnaround and U.S. snacking

Highlights

PepsiCo's North American food business sales fell 2% and beverage volume dropped 4% in Q2, despite 15% snack price cuts amid weakening demand.
GLP-1 weight-loss drug adoption reached 21% of U.S. households in May 2026, accelerating consumer shifts away from sweet and salty snacks and pressuring PepsiCo's core brands.
PepsiCo faces intensified scrutiny from Elliott Investment Management as its stock is down about 4% year-to-date, underperforming Coca-Cola’s 20% rise.

North America volumes weaken despite price cuts

As reported by Reuters, PepsiCo is contending with softer demand across key U.S. categories as consumers pull back on discretionary food and drink purchases and increasingly favor healthier options.

In the second quarter ended June 13, sales in PepsiCo's North American food business fell 2%, while volume was flat even after earlier price reductions of as much as 15% on several leading snack brands. That reverses the more modest recovery investors saw at the start of the year, when volume growth improved to about 2% in the first quarter and the business returned to growth.

Pressure is also evident in beverages. PepsiCo's North America beverage volume fell 4% in the latest quarter, while Coca-Cola reported 4% growth in the region three months earlier. Volumes in PepsiCo's food business have declined four times in the past six quarters, adding to concerns about the strength of its snack-led portfolio.

Health trends and investor scrutiny intensify

Consumers in the U.S. are increasingly shifting toward products seen as healthier, including foods with more protein, less sugar and added fiber. A PwC analysis of Numerator data shows GLP-1 weight-loss drug adoption rose to 21% of U.S. households in May 2026 from 9% in January 2025, with users buying fewer sweet treats and cutting back on salty snacks.

That trend carries particular weight for PepsiCo because food brands including Ruffles and PopCorners generate about 58% of its annual revenue. Analysts say any turnaround depends not only on affordability but also on how quickly the company expands into functional and health-oriented products, while executives said last week that improvement in North America is likely to be more gradual than previously expected.

The weaker performance is also likely to draw closer attention from activist investor Elliott Investment Management, which disclosed a stake of roughly $4 billion nearly 10 months ago and has pressed PepsiCo to revive its soda business, lift its share price and consider selling non-core food assets. Market performance has added to that pressure, with Coca-Cola shares up more than 20% so far this year while PepsiCo stock is down about 4%.

In our earlier article on mixed U.S. stock futures, we outlined how markets turned cautious after a sharp jump in oil prices tied to renewed Strait of Hormuz blockade fears. We noted that investors were balancing the energy-driven inflation risk with the start of bank earnings and upcoming CPI data, leaving tech firmer while broader indexes stayed under pressure.

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