PepsiCo’s international growth gains pace at 8%; India among key markets delivering volume and share gains

PepsiCo is increasingly looking to its international markets to drive growth as its North American business continues to fall short of expectations, with India emerging among the markets delivering both revenue growth and market-share gains in the third quarter.

The beverages and snacks major reported a 5.6% increase in net revenue in the September quarter, while organic revenue growth accelerated to 3.1%, its strongest pace since the fourth quarter of 2023. More significantly, international organic revenue growth accelerated to 8%, the highest since the first quarter of 2024, with both international beverages and convenient foods delivering volume and revenue growth.

PepsiCo said its convenient foods business performed well in India during the quarter, while its beverages business also recorded organic revenue growth. The company also held or gained savory snack share in India and maintained or gained beverage share, putting the country alongside markets such as China, Brazil, Saudi Arabia, Australia and Thailand that are helping support the international business.

For PepsiCo chairman and CEO Ramon Laguarta, the quarter meant a strategic shift towards international markets and faster-growing parts of its portfolio. “We are encouraged by the trajectory of our international business and its long runway for growth,” he said, while acknowledging that the company still has work to do in North America.

International operations accounted for 41% of the company’s net revenue and 45% of its core operating profit in the first nine months of the year. In the third quarter, international core operating profit rose 16%, while core operating margin expanded by 105 basis points. 

Eye on international growth push

PepsiCo has been pushingbeyond traditional consumption occasions and build newer categories across markets. Globally, it is focusing on areas such as portion control, protein, fibre and simpler ingredients in foods, and functional hydration, zero sugar, energy and protein in beverages.

In line, those are the products PepsiCo is backing globally, including Doritos Protein, Lay’s Baked with olive oil, Gatorade Lower Sugar, Pepsi Treats zero sugar and its multipack offerings. The company said it would continue investing in the distribution and visibility of these platforms. 

The company is also widening its focus beyond conventional retail. PepsiCo said it is expanding beverages and convenient foods across local restaurants, fitness, workplaces and recreation, while developing new direct-to-consumer models and meal occasions. 

The North American picture

The international momentum, however, is partly masking a tougher picture in PepsiCo’s biggest developed market. Laguarta said the North American business “performed below our expectations” and called it a “meaningful opportunity for improvement”. In beverages, PepsiCo’s carbonated soft drink performance trailed the category, even as functional hydration and zero-sugar products continued to perform well. 

PepsiCo’s overall core operating profit increased 3% in the quarter, but core operating margin fell 35 basis points, with operating cost inflation and higher advertising and marketing investments partly offsetting productivity savings, pricing and $178 million in tariff refunds. PepsiCo Foods North America’s core operating margin fell 280 basis points, while the beverages business saw a 15-basis-point decline.

Laguarta said the company is responding with productivity measures, automation, network optimisation, digitalisation and simplification. It is also identifying structural cost reductions, including lower corporate costs and cuts to discretionary spending. “We will build on the strength and resilience of the international businesses and aim to sustainably improve the growth trajectory of the North America business,” he said. 

For full-year outlook, the company now expects organic revenue growth of about 3% in fiscal 2026, compared with its earlier range of 2% to 4%, while net revenue growth is expected to be about 6%, at the top end of its earlier 4%-6% range. However, it sharply moderated its earnings expectations, with core constant-currency EPS growth now forecast at 1%-2%, versus the low end of its previous 4%-6% range. Core EPS growth is expected at 2.5%-3.5%, compared with the previous low end of 5%-7%. 

According to Laguarta, the company is pursuing growth with a greater emphasis on volume, international scale, faster-growing categories and new consumption occasions, while North America remains the market where “much opportunity remains to unlock future growth and reduce costs.”