PepsiCo, Inc.
Consumer Staples · Soft Drinks & Non-alcoholic Beverages
Structural: Frito-Lay is the dominant global salty-snack franchise (~$25B+ revenue, mid-teens operating margins), bundled with the #2 beverage system worldwide. Two-decade record of organic growth + dividend hikes (53 consecutive years). Pricing has been the primary growth lever 2022-2024 as input costs spiked; 2025-2026 thesis is volume recovery as elasticity normalizes and input deflation lets price hold flat.
- North America Beverages volume troughing; pricing absorbs input deflation = margin tailwind into FY26-27
- International segments compounding HSD organic; LatAm + APAC under-penetrated vs $KO
- Frito-Lay productivity program (digital, automation) reaccelerating after 2024 reset
- Free cash flow ~$8-9B funds 3%+ dividend yield + buyback without leverage stress
- Pricing power has held; private-label share gains have plateaued in core salty snack
- GLP-1 demand impairment thesis (snack/soda) still unproven but tail-risk priced
- Frito-Lay NA volume down 3-4% multi-quarter; consumer trading down on bag size
- Quaker recall overhang + slow recovery in cereal/oats
- FX drag on international comps in any USD strength regime
- Multiple (~20x fwd) prices a return to mid-single organic; misses get punished
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