PepsiCo Refreshes Lay’s Brand After Q3 Snack Volume Declines

PepsiCo announced a slew of product innovation during its third quarter earnings, leaning into high-fiber, protein and low-sugar in beverages, while aligning with better-for-you trends in snacking.

In its North America segments, PepsiCo Beverages (PBNA) organic revenue growth increased 2% with volume down 3%. PepsiCo Foods (PFNA) organic revenue fell 3%, slipping further from the 2% decline in Q2. PFNA volume was also down 4%.

As the company closes out the final quarter of the year, CEO Ramon Laguarta expressed “optimism” with “continued acceleration of net revenue in PBNA and the same with PFNA, which should be very close to flat this quarter.”

In PFNA, the company continues to focus on improving margins and reducing costs along its supply chain. In general, Laguarta pointed to rationalizing the company’s food manufacturing capabilities to create more efficiencies and to reduce costs. He highlighted automation efforts and “right-sizing” its infrastructure to meet the needs of PepsiCo’s go-to-market strategies.

Company leadership was bullish on promotional programs that focused on “permissible snack offerings.” The emphasis on this segment of PFNA was reflected in double-digit net revenue growth in Q3 for the Sun Chips, Quaker rice cakes and Simply platforms, and mid-single digit growth for the Stacy’s brand.

PepsiCo has refreshed Lay’s packaging and identity after pledging to remove artificial flavors and colors from the potato chip brand. Doritos and Cheetos will also contain no artificial flavors and colors, as PepsiCo expands its use of avocado and olive oil across many chip varieties.

In PBNA, the Pepsi brand tallied volume and net revenue growth in Q3, driven by double-digit gains for the Zero Sugar variety. The integration of Poppi into Pepsi’s distribution system was completed in early September. The brand has estimated year-to-date retail sales of $525 million, a 50% increase versus the prior year.

Along with the launch of Pepsi Prebiotic, the company announced it would be accelerating innovation in these sugar-free and modern soda brands as it prioritizes its “permissible offerings” and consumer demand for functional beverages.

Laguarta said that Pepsi is “working with a sense of urgency” to launch high-protein innovations, which are “disproportionately growing” among consumers.

Pepsi is preparing to relaunch Muscle Milk with no artificial flavors, sweeteners or added colors. Its enhanced water brand Propel is also leaning into trends with a soon-to-be-released Protein Water line as well as a high-fiber, high-protein and “special electrolyte” blend for GLP-1 consumers.

“Fiber will be the next protein,” Laguarta added in response to a question about beverage innovation

The company maintained its FY2025 guidance of low-single-digit organic revenue growth.

Prior to the call, PepsiCo announced that longtime EVP and CFO Jaime Caulfield would be retiring next year. Former Walmart executive Steve Schmitt will take over the position at Pepsi, effective November 10. Before occupying a variety of financial executive roles at Walmart and Sam’s Club for nearly 10 years, Schmitt led investor relations at Yum! Brands for over 10 years.