PepsiCo second quarter profits jump, but demand continues to slip with prices higher

High prices are a big reason for the lower sales. In May, the average U.S. price for 16 ounces of potato chips hit $6.62, according to government figures. PepsiCo said Thursday that customers have grown more value-conscious and are shifting to less expensive store or shopping at discount stores.

The company said it hopes to to lure customers back with deals and more visible in-store promotions. It also hopes to accelerate sales of its healthier brands - like PopCorners, Smartfood and SunChips - which have been growing at a faster pace than the rest of its portfolio.

PepsiCo's income rose 12% to $3 billion, or an adjusted $2.28 per share, for the April-June period. Wall Street had expected earnings of $2.16 per share. The company said its continuing drive to operate more efficiently - including reducing waste and adding more automation to its plants - boosted earnings.

grew less than 1% to $22.5 billion. That was slightly lower than the $22.59 analysts forecast

Organic revenue - which is adjusted for foreign exchanges and the impact of product acquisitions or divestments - rose 1.9% for the quarter. PepsiCo said it now expects 4% organic revenue growth for the full year; previously, the company had forecast organic revenue growth of "at least" 4%.

slipped more than 2% before the opening bell and shares of Coca-Cola and Keurig Dr fell as well.

Globally, sales volumes fell 3% in the second quarter. It was the company's eighth straight quarter of falling volumes. PepsiCo has said some of that volume decline is strategic, since it has been shrinking package sizes. But it has also seen U.S. customers buying fewer snacks or switching to store brands in the face of its continued price hikes.

PepsiCo, based in Purchase, New York, has leaned heavily into price increases over the past two years as its costs for ingredients and packaging rose.

The fourth quarter of 2023 was the company's eighth straight quarter of double-digit percentage price increases and it hiked prices 5% to start the year, and another 5% in the just-completed quarter.

PepsiCo's Quaker Foods brand also struggled in the second quarter as it continued to recover from a product recall earlier this year. Quaker Foods revenue fell 18% in the April-June period.