The US earnings season kicks off again! Will performance exceed expectations?
百事可樂2025Q3業績直播
Key Takeaways (AI-Generated)
Financial Performance
- Beverage business grew volume in Q3 excluding case-by-water investment
- Pepsi brand achieved growth in volume, net revenue, and market share globally
- International business expected to return to mid-to-high single digit growth
- PBNA expected to show continued net revenue acceleration with Q4 flat performance target
Business Highlights
- Successfully relaunched Pepsi brand globally showing strong momentum and growth
- Planning major relaunches of three top brands: Lays, Tostitos, and Gatorade
- Away-from-home channel growing 2-3x faster than retail business domestically and internationally
- Service levels improved to 97-98% after resolving early year system transition issues
Financial Guidance
- Clear line of sight to return to algorithm growth during 2026
- PBNA expected to reach flat organic sales performance in Q4
- International business to return to mid-to-high single digit performance
- Continued margin expansion expected across all segments in 2026
Opportunities
- Away-from-home channel showing accelerated growth at 2-3x retail business rates
- Major brand relaunches of Lays, Tostitos, and Gatorade expected to drive growth
- Food business showed growth in last four weeks of Q3 indicating momentum
- Strong execution focus on existing products and innovation for away-from-home segment
Risks
- Early year service level disruptions from system transitions impacted performance
- Consumer stress and value-seeking behavior affecting market dynamics
- Competitive pressures in beverage categories across international markets
- Operational challenges from business model transitions and infrastructure changes
Full Transcript (AI-Generated)
Operator
It is now my pleasure to introduce Mr. Robbie Pamnani, Senior Vice President, Investor Relations. Mr. Pamnani, you may begin.
Robbie Pamnani
Thank you, operator and good morning, everyone. I hope everyone has had the chance this morning to review our press release and prepared remarks, both of which are available on our website. Before we begin, please take note of our cautionary statement. We may make forward-looking statements on today's call including about our business plans, guidance and outlook.
Forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today, October 9th, 2025 and we are under no obligation to update. When discussing our results, we refer to non GAAP measures which exclude certain items from reported results. Please refer to our third quarter 2025 earnings release and third quarter 2025 Form 10Q available on pepsico.com for definitions and reconciliations of non GAAP measures and additional information regarding our results, including a discussion of factors that could cause actual results to materially differ from forward-looking statements.
Joining me today are Pepsico's Chairman and CEO, Ramon Laguarta and Pepsico's Executive Vice President and CFO, Jamie Caulfield. We ask that you please limit yourself to one question. And with that, I will turn it over to the operator for the first question.
Operator
Thank you. In order to ask a question or make a comment, please press * followed by one one on your touch tone phone at any time. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Bonnie Herzog with Goldman Sachs. Your line is open.
Bonnie Herzog
All right. Thank you. Good morning, everyone. I had a question on the volume pressures you continue to face in both your food and beverage businesses. I guess could you give us a sense of how much this is being impacted by your pivot to smaller pack sizes, you know, maybe versus category trends softening or potential market share losses?
You know, essentially how should we think about these volume declines and then how should we think about volume growth moving forward? Is it realistic to assume that volumes could start to inflect, especially considering, you know, the robust innovation pipeline you've highlighted this morning? Thanks.
Ramon Laguarta
Morning, Bonnie. Yeah, let me start with beverages. In beverages, the masks are easier when you take out the case by water kind of the investment on new business model we have beverages actually grew volume in the quarter. So we're very happy with the performance on the beverage business, especially some of the larger brands like Pepsi grew volume, grew net revenue grew shares. So positive, positive development in beverages.
In foods, we changed the promise strategy in the summer and you know, we went rather than very deep on a particular brand as we did in 24. We tried to provide everyday low value or better value to across all the brands that impacted the volume, better revenue realization. It's probably a more balanced growth of the category and our competitiveness in the category. So that's that explains a little bit the Q volume going forward.
We're optimistic as you said, both improvement of the basic performance. We had some service level issues early in the year as systems transition. Now that's behind that. Service levels are very high on both businesses in the 9798. That's been well appreciated by our customers and we're seeing much better fuel rates are much better, you know execution point of sale that's driving growth.
We're seeing as you're saying, you know some of the innovation rolling out and that will that will give us you know volume growth. But I think we should think about the top line of the business at a balance between volume growth and and price realization going forward. And we'll should see an acceleration in PBNA, continued acceleration of net revenue in PBNA and the same with with the food business, we should be very close to to flat this quarter.
In food. Actually we're very optimistic that the business actually grew in the last four weeks, the last quarter in the last period that we closed optimistic about the the top line growth on both businesses and the acceleration. And when, when with regards to international, we had a bit of a weaker summer because of some, you know, weather and some other elements in in some of our large markets.
September was also very good in international. So we see that as. The summer a bit of a blip and international is back to mid single digit, high mid single digits, you know performance in the in the in the last month that we closed.
Jamie Caulfield
The other thing I'd add Bonnie is as we lap some of these acquisitions, if you look at a Siete Poppy, the Aulani new that's not included in organic. So as we anniversary those the volume and net revenue is going to be reflecting the organic sales growth.
Operator
Thank you one moment for our next question. Our next question comes from Dara Moschetti with Morgan Stanley. Your line is open.
Dara Moschetti
Hey, good morning. So the commentary was helpful on top line growth. I guess just looking out more to 2026 and longer term, obviously a lot of work's underway to reinvigorate top line growth. Clearly the heightened innovation focus focused on permissible or or more functional benefits in terms of products, portfolio reshaping, price pack architecture away from home, etcetera, etcetera.
So just when you bring it all together, Ramon, which areas do you think are most impactful as we think about potentially accelerating revenue growth in 2026? Can you give us a little more specificity on, you know, when you think we'll start to see material progress on that front? And do you think there's a line of sight to returning potentially the long term top line growth, your long term algo at some point within 2026 just when you wrap all these efforts together? Thanks.
Ramon Laguarta
Yeah, thank you there for the question. And it's super critical, right? We're acting with a lot as you can, as you saw and you said with a lot of sense of urgency on on how we reignite top line growth, growth across the business. And yes, we see a clear line of sight to going back to algorithm throughout 26. Now is it Q3, is it Q4? We'll see. But clearly I'll, I'll, I'll tell you about the why we see that happening during the year.
The, the, the first one is being brilliant at the basics and that is something that we're focusing on. As I said earlier, the right price points, the right service levels, the right execution, the right, the right service to our customers, the right customer plans. And we feel very good about how, you know, our, our customer plans are starting to shape up, you know, and we're, we're late, we're already quite advanced in the process with, with our larger customers.
So that's being brilliant at the basics that we're making some big interventions in big brands. I said Pepsi is growing globally and we relaunched Pepsi a year and a half ago. Now we're going after three of our top brands, Lace, Tostitos and Gatorade. We're relaunching three of our top brands in the US and globally and that is going to drive growth in the core of the business, which is which is essential to your point on what's going to drive future growth.
Now that is that is happening as we as we speak with Lace and Tostitos and it's happening with Gatorade a little bit later in the in the in the Q Q1 to Q2 time frame. The other element we're focusing on is really accelerating the platforms that are growing and you mentioned some away from home is growing very fast for us in the US and internationally. It's going to be a focus for us.
It's growing like 2 to three times. The retail business we'll continue to focus is execution of existing products and then some innovation special for away from Home, more moving towards meals and more elevated experience. You mentioned permissible snacks. We have a very strong portfolio, permissible snacks in the US and 0 sugar across the world. That will continue to be a focus of our innovation and that will drive growth.
And then we have in functional hydration, we have a superior portfolio with Propel and the enhancers and tablets growing very fast. Those will be platforms of existing parts of the portfolio that will put a lot of investments that will drive growth. Now innovation is critical for us and we've been working with a real sense of urgency on new platforms to capture segments of the market that are, you know, disproportionately growing within our, you know, somehow low growth categories.
So you mentioned protein, so there a lot of innovation on protein, the relaunch of Muscle Milk a a Starbucks and protein. We know in the morning consumers are looking for protein as well, Doritos protein, Quaker protein, we're having a good warrior meat snacks with our artificials and then a new development from Propel for GLP one consumers that will have a special type of electrolytes, high content of fiber and good levels of protein.
And so that in the protein space, which as you know is driving a lot of a lot of growth. Now the move to non artificials impacting all our brands, Lays and Tostitos. Now that the rest of the portfolio throughout 26 and a new platform, we call it Naked that will have no colors and no artificials. We'll see how consumers react to the same great flavors with no colors. The customers are really very excited. We're also excited. Let's see if we can take consumers along in which would be a great development for the, for the category.
We're, we're, we're launching products with higher fiber. I think fiber will be the next protein. Consumers are starting to understand that fiber is the benefit that they need is actually a deficiency in US consumers diet and that will, will, will, will be elevated. And then we're, we're also innovating in new oils, some of our platforms special in potato. You will see us coming with avocado oil versions and olive oil.
So a very a very strong innovation pipeline which we think will help us capture pockets of growth in our categories that will that will drive growth. And then the last element as as Jamie was saying, we we made some acquisitions that are very strategic in how we reshape the portfolio. We divested some, we acquired some. We're very optimistic how Poppy is now in our system and we're already seeing benefits of the physical availability of the product.
We're seeing growth, we see, we're seeing growth with Sabra and we're, we're we're going to incorporate Alani new into our portfolio later in the year. So those are new platforms that will continue to accelerate the portfolio. Some of that will be organic, some of that will be non organic, but that's what how we see the portfolio moving towards positive growth in some parts of the portfolio, the total company going towards you know within our long term and net revenue growth targets within within next year and obviously we're working to do it as soon as possible.
Operator
Thank you one moment for our next question. Our next question comes from Lauren Lieberman with Barclays. Your line is open.
Lauren Lieberman
Great, thanks so much. Good morning. Wanted to talk a little bit or ask a little bit about the cost associated with a lot of these innovations and the you know, plus protein better for you, cleaner labels etcetera that you've run through. Would think that these come at a higher cost of goods. I know you've talked a lot about cost savings as well, but I think you, you know, you're going to want to reinvest.
So can you talk a little bit, you know, margin structure or how to think about the cost implications of taking the portfolio and your big core brands in this direction and also, you know, what you do to make sure there's sufficient brand support for these relaunches, particularly as we look into 26? Thanks.
Ramon Laguarta
Yeah, good. The overall company within that will continue to improve margins going forward and we're we're with a again with a very high sensor of urgency. We are attacking the cost structure in the different businesses with different tools. In particular, you already saw probably today in our remarks how we are attacking the deleveraging free to lay with very, you know, I would say intentional and and active actions around the supply chain and they go to market fixed cost and that's happening total company.
Lauren, we see, we see the margin improvement next year again driven by the continuous acceleration of international and international is a creative to the company and continues to scale and becoming more profitable. That will continue in 26. We see PB and A continue to expand margins at a good pace in, you know, the Q 3 was impacted by tariffs. We see already in Q4 an expansion of the margin again to complete a a a positive margin expansion for the full year.
And and we see Frito Lay or the foods, the foods business in North America also is starting to bend the curve after, you know, all the interventions we're making in the in the fixed cost structure. The truth is that we invested a lot in Frito Lay in the last few years. Some of that was under their investments. Some of that was, you know, expanding capacity. This the demand signal we had in 23 is different from the demand signal we have in 25.
So there's some adjustment that we're making to the both the assets and the and the headcount in in the business to make sure that we have the right cost structure to navigate the the coming quarters. So think about expansion of the margin for total PepsiCo with the drivers that I said, the portfolio as you mentioned, cost of goods, yes, but also price will. Will be higher. So you should see the innovation as accretive to the business and the the A&M we're making obviously internal reallocations to make sure that the new platforms have the right money and also some of the costs that we're taking out from our fixed cost structure. We will put it back into A&M to accelerate, accelerate growth in the coming quarters.
Operator
Thank you. One moment for our next question. Our next question comes from Steve Powers with Deutsche Bank. Your line is open.
Steve Powers
Great, thank you everybody. We're maybe picking up on, on that thread with respect to productivity, could you just give a little bit more detail on, you know, where the interventions are specifically in, in PF and a that you're making to to right size that that that kind of fixed cost structure and, and how far along you think you'll be at the end of at the end of 25?
Do you think you'll have right size that business relative to the current demand signal or is there more work to do in 26? And if I could, you know, one of the things that I, I didn't see in today's remarks or release is, is any difference to One North America, which obviously was a, a big point of focus last quarter. So maybe you could talk about if that if that omission was intentional or just just kind of where we are with One North America. Well, thank you.
Ramon Laguarta
Yeah, good. So I'll let me, let me cover both on, on Frito, I'll give you that. We're we're we're clearly, you know, going after some manufacturing notes that are not needed anymore. These are normally the least efficient older manufacturing notes that we have in the system. And as we've increased capacity throughout the system in the last few years, those notes can go away.
We're also rationalizing our warehouse infrastructure both in the context of some automation decisions that we're making and also you know some combination with the beverage business in some parts of the country. There is a right sizing of our go to market as we see the labor market is stabilizing some of the you know excess labor that we had in go to market. Now we we can probably live without without those, those, those. Extra, extra coverage.
So those are the three main areas. There's there's, you know, the, the, the, the, the global levers of, you know, we're servicing PepsiCo from global capability centers and some, some of the changes we're making in how we service the company that it's also a continuation that applies to a Frito Lay. Now the the good news in Frito Lay is that when we see the productivity per FTE is now at the levels of a couple of years ago.
So we've been able to you know, get get to those metrics with the reduction of fixed cost that we've done in the last in the last 6-7 months. There will be a continuation of those interventions in the balance of the year. And I think they they will continue that we will have additional productivity interventions in 26 because we need to invest in affordability and we need to invest as was previously mentioned in some of the new platforms to drive growth. So you should expect that in the in the coming, in the coming months.
Jamie Caulfield
The only other thing I'd add is, is the pace of productivity. It built as we went out, went through the year and we took some of these incremental cost resizing actions. So as you go into 2026, we're going to have a pretty significant carryover benefit of those actions, particularly in the first half of the year.
Ramon Laguarta
Yeah, on One North America, we continue to you know, as we look at all the different opportunities to reduce cost, improve margins, Dr. growth, we're looking at One North America as one of the options. We're testing that in Texas, Texas, Texas, probably the the state where we have the biggest opportunity given our low share in beverages, high sharing snacks.
When we put those, you know, those businesses in the same warehouse and we serve the customers from 1:00 point of distribution. This is giving us a lot of benefits. So we will see we're we're testing and learning in, in Texas and from that we will make decisions on how we expand it into the rest of the country. The, the end solution will not be A1 size fits all for the whole country.
So it will be more of a nuanced solutions depending on the market, the market positions and the, the market size and the where the population is in the different parts of the country. So we'll keep updating you on on on the decisions in the in the space.
Operator
Thank you One moment for our next question. Our next question comes from Filippo Filori with Citi. Your line is open.
Filippo Filori
Hi, good morning everyone. I wanted to ask about the international business. Ramon, you mentioned the quarter was negatively impacted by poor weather, but you saw a nice improvement in September, which is pretty encouraging. But some of your peers have talked about like some more macro pressures in regions like talk in America, Asia Pacific, including India.
So maybe can you give us a sense of the the health of the consumer in some of those countries? What are you seeing and what gives you the confidence in index? Thank you.
Ramon Laguarta
Yeah, that's great. Filippo, I think listen when it comes talking about Q3, I think most of the deceleration are linked to mostly weather Filippo in some of the large markets. And, and, and the good news as I said is that September was, is strong, was strong and we we feel good about the balance of the year going back to the you know, the mid to highs, mid single digits for, for, for our international business.
Now overall the consumer is, you know, I would say it's is stressed all over the world. We see the consumer making very choiceful decisions in many parts of the world, in China for sure. And China is a big market for us, not so much in India. We're seeing growth in II was more impacted by by weather and there's some competitive situation in the beverage category that will impact the, you know, the the the growth maybe for a few quarters, but but coming back strong.
We're seeing good growth in the Middle East, the consumer in the Middle East probably feeling good. Eastern Europe better than Western Europe, I would say. And then yeah, Mexico is Mexico somehow connected to the US, right. And and you know, however the US goes that that impacts Mexico quite a lot. Clearly the Hispanic, you know, Hispanic cohort in the US is, is being impacted by by all these decisions and we see a remittance says impact in Mexico in a way and and that will continue probably for the for the next few quarters.
Brazil continues to be strong for us close to double digit in, in the in September and and a good, good, good summer, their summer, I mean our summer and so good, good. I would say, you know, we see the consumer, you know, different parts of the world, different different realities. But overall we're managing to compete well and we're managing to keep consumers in our brands and and developing the per cabs, which is the big idea for us internationally.
Operator
Thank you one moment for our next question. Our next question comes from Michael Lavery of Piper Sandler. Your line is open.
Michael Lavery
Thank you. Good morning. Just want to come back to brand Pepsi, you know, just seeing it's better improvement of either it's better momentum and improvement in the US and even from a share performance perspective and just curious maybe some of what's been driving that? How much is it just a changing of the messaging or, or you know, maybe an increase in marketing?
And also when you talked about optimizing marketing spend as, as one of the ways to drive better ROI, is there cuts to, to the marketing spending that's planned or, or do you believe you can be more efficient? Maybe help us understand just how to think about that language there as well?
Ramon Laguarta
Yeah, I, I think as I, as I mentioned the, I think the Pepsi brand has been a success for us. The relaunch we did I think about a year and a half ago in the US, about a year a bit more in international has been a great success and we're seeing momentum in the Pepsi brand in many, many markets. I would say internationally it is driven by the non sugar success.
I think 0 sugar, non sugar Max in Europe, it is driving consumers to the brand. It is keeping consumers in the brand and continue to be very positive for us from, from the market share, but also the the overall non sugar segment growth. So we're we're very pleased with that. In the US multiple factors. As I said, there is AI would say a focus on away from home and and food dishers.
Pepsi, I think the meal location is critical for beverages. It's very important for cola and we are focusing more and more in gaining points of access to the brand and linking the brand to that particular occasion in a culturally relevant way. Now different types of foods for different types of consumers and and good. Good execution. I thought we're investing a bit more in the brand and that is that is relevant.
As you said, from the marketing point of view, there are two platforms that are growing faster than the rest. One is 0. Sugar, which is consistent with our international growth story. And the second one is flavors and flavors, especially white cherry and cream, but some others are, are, you know, bringing new consumers to the, to the brand, younger consumers to the brand. And that is that is positive news for the development of, of Pepsi.
So, you know, we, we feel good. We'll continue with those drivers. We'll continue to investing in what is our clearly our, our, you know, most important brand in the beverage portfolio. And, and we'll, we'll, you know, for next year, we're assuming that, you know, Pepsi, it will continue to grow and we'll be able to add some new layers of growth with Mountain Dew.
And you know, Baja Blast is, is a very solid platform, a billion, a billion dollars in retail value when you include both our sales and Taco Bell sales, it's a very strong consumer platform. We're adding now a new, a new platform with Dirty Dew, So kind of a creamy flavours to the, to the Mountain Dew platform. I think that will continue to expand the brand into more, more consumers.
And then as I mentioned, the relaunch of Gatorade, which is critical for us, you know, we're, we're, we're, we're leaders in a, in a, in a category that needs to grow faster. So we're working on value for Gatorade, but most importantly, we're working on to your point of marketing on superior hydration. We know we have proven superior electrolyte combinations that deliver both faster hydration, better hydration, longer hydration, and we're working on different parts of the portfolio to convey that message to the consumer and and you know, we're optimistic about how that will play out for us.
Operator
Thank you one moment for our next question. Our next question comes from Peter Grom with UBS. Your line is open.
Peter Grom
Thank you. Good morning, everyone. So I was hoping to follow up on the prior commentary to I think it was Bonnie's question. So I think you mentioned an expectation for PF and A to get back to kind of flat organic sales performance in the fourth quarter and that you actually saw the business return to growth in the last month.
So just as you look at what happened over the last month, is that simply a function of what you were lapping or is it more related to the actions around innovation and everyday execution? It's just not something we we've seen yet in the data. So just any color on what happened in the last month and how that drives the confidence on the path forward? Thanks.
Ramon Laguarta
I mean, listen, clearly there is sequential improvement in the business and at this point I would say it is more related to being brilliant at the basics. So doing better the the core things that drive our category, service price execution, a customer space etcetera. So the key drivers of our category, I don't think it's one off I, I would see a better customer engagement, customer relation as our service levels became better following the system transition early in the year and and that should be sustainable.
Now I don't want, you know, to like things can change, things can evolve, but but clearly the trans, the direction of the of the business, it's in the right direction and we're seeing signs that make us feel optimistic.
Operator
Thank you one moment for our next question. Our next question comes from Andrew Teixeira with JP Morgan. Your line is open.
Andrew Teixeira
Thank you and good morning everyone. So my question is how to think about the headwinds of this key rationalization impacting new organic growth? And two clarifications, Ramon for PSNA, can you comment on the results of the price reinvestments in particularly the core brands at the entry level price points?
And then second, I think you answer Bonnie and and Peter a bit on, on the volume inflection, Is that a commentary that I said volume infected positive in the last four weeks, Is that for a total company or specific to some regions? I'm assuming specific to some regions and areas where you're seeing that service level coming back. So where are you seeing if that's the case, where are you seeing the volume inflection? Thank you,
Jamie Caulfield
Andrea, pardon me, it's Jamie. When the SKU rational. I mean, there's a lot of benefits that come from cutting the long tail. And as we analyze the portfolio, there's a lot of overlap on those very small volume items with some of our larger parts of our portfolio. And as you cut that long tail, you create a lot of operational efficiency that leads to better customer service and that you know, so that you're not losing a lot and and there's a lot to gain through the efficiency and and improved service.
I missed. Yeah. Andrea on the entry price points. Can you just restate your question on that? We didn't, we didn't quite capture it as you were cutting off there a little bit.
Operator
Her line has actually left the queue. If you give me one moment, I cannot bring her back.
Jamie Caulfield
OK, OK, not a big deal operator, either way.
Operator
OK. One moment and your line is opening and Andrew, you're gonna repeat the question.
Andrew Teixeira
Thank you. So just for the PF and A if you're thinking like the pricing investments that you made in some of the core brands and entry level price points, can you comment on how those results have been coming out or you know it's, it's more coming from the permissible area of the business, how we should be thinking about the price for investments you've been making for I think more than than 3/4 for now.
Jamie Caulfield
Yes. So I view them as two fairly separate the permissible sub categories doing well. Our permissible portfolio continues to do well. We look at the entire portfolio for price pack architecture opportunities. I think the bigger opportunity is in some of what I'll call more of the mainstream in take home.
And and we've been, we've been refining as we've moved through the year. We'll continue to refine as we get more and more data on how the the brands and and the packs are, are interacting with each other across the competitive set. And yeah, so that's, that's, that's the priority is to make sure that we've got the pricing very sharp to help drive demand.
Operator
Thank you. One moment for our next question. Our next question comes from Peter Galbo with Bank of America. Your line is open.
Peter Galbo
Hey Ramon, Jamie, good morning Ramon. One of the areas where you you focused a lot on in, in the prepared remarks within PBNA, what was on protein? And I guess I just want to understand a little bit more on the decision of kind of using the the in house brands like Muscle Milk or Propel to address, you know, protein in a bigger way versus other subcategories like energy or prebiotic where you've either bought or partnered.
So maybe just if you can expand a little bit on kind of the decision to go more organic versus, you know, acquisition or partnership as we think about protein and beverages going forward. Thanks very much.
Ramon Laguarta
Thank you. Yeah, no, listen, it was we always try to leverage as much as we can our existing platforms. Is, is, is a cheaper is a Better Business decision. I think Muscle Milk, you know, is, is a great brand that as we improve the product and we, we, you know, we're very, we're very proud of the product that we've been able to our R&D teams have been able to develop will be a great taste thing, high levels of protein, good mouthfeel and artificials.
I think it will, it will clearly serve a lot of consumers that are looking for protein drinkable solutions to replace meals or, or snacks throughout the day. I think, I think Muscle Milk can stretch is a brand that that has has the potential will reposition. It will communicate a bit different. The, the, the packaging will be very, it's, it's very modern and, and updated the same with Propel.
Propel is a great platform. He has a high penetration in female and it's, it's, it's been growing at a double digit CAGR for the last 5-6 years. He has, he has a lot of credibility in hydration, but, but I think he can expand into more. So This is why we, we think that we can take it into more of a, you know, functional hydration plus platform with Propel focus on, on females, but on not only both in powders and in liquids.
And I think that that will have a multi year innovation opportunity for us as we see consumers looking for more functional solutions in drinks that are not even available right now in the market. So yeah, it's always a better ROI for the company to develop internally than not. In some of the examples that you put with Poppy and some others, we didn't have the platform. To, to, to, to, to go after those opportunities and, and, and the marketplace had already some scale players that, that it was a better return for us to go on and acquire.
And we'll, we'll continue to do both as we go along, innovate internally, take some of our big brands into new spaces, rejuvenate the portfolio under the big brands and at the same time look outside for tacking acquisitions that might give us head start or additional scale in segments that are growing faster, you know. And so as you know, we're looking at portfolio transformation with a sense of urgency and we're, we're making I think the right moves as you see from our innovation pipeline and some of the M and as we've made in the last six or seven months, you know.
Operator
Thank you one moment for our next question. Our next question comes from Robert Ottenstein with Evercore ISI. Your line is open.
Robert Ottenstein
Great, thank you very much. So Ramon kind of a A2 part question. The first part is, you know, you talk a lot about right sizing the cost structure, aggressively attacking costs, but at the same time getting back to algorithm suggesting that perhaps the the top line isn't the problem, but maybe it's the type of cost that you have. Perhaps too many costs in the US in certain assets and certain brands, but you're going to make up for that in growth internationally.
And then innovation in the US, which may require a more complex cost structure, maybe smaller runs, different sorts of supply chains, and in a whole different way of looking at the cost structure. So number #1 is that assessment roughly right? And then connected to that very big announcement on the CFO side. Congratulations to everybody. Could you talk a little bit about that decision to go outside of the firm to a very well respected leader at at your biggest customer and how you see him driving through that vision? Thank you.
Ramon Laguarta
That's good. So listen, I I think it's an on is not an either or so to for us to to be fit for the future, we're going to have to transform the portfolio and we we're doing that with the center of urgency and that will drive growth as we are more on consumer trend and we're more, you know, in spaces of the category that are growing. So that I think we spend quite some time and but also we need to address.
The cost structure of the business because we need to continue to be extremely competitive and we know consumers are looking for value and value will be critical going forward. Being at the right price points, competing with competitors, but also private label that will have you know they're offering so clear. There is a need for us to reduce the cost. Also change the type of 'cause we need to be much more agile, we need to be much more flexible, have optionality.
We've invested a lot in technology in the last five years. It is in our PNL. It's been a cause for us for the last five years. Now we, we can benefit from applying technology to everything we do, applying AI, overlaying intelligence to the infrastructure of data we've created. And that will give us optionality, agility and and flexibility, which is, which is probably what the market requires given the, the continuous pivots from the consumer and from the, from our, from our partners, the, our customers.
So that's how we're thinking. So you'll see us going with a big sense of urgency against portfolio transformation and against cost transformation with decisions on assets, but also applying technology to our business at a very, very fast pace. And we're ready for that probably will become a competitive advantage for US versus other companies given the investments we've made.
Now with regards to the CFO transition press, first let me let me thank Jamie for for all the 35 years Jamie or 3333 years, 33 years in the company. He's been an amazing he's in partner. We've worked together for some periods. I mean, I was in Europe, he was here, but we, we knew each other for a long time and we've been a you know, we've been doing a lot of work together.
Now. Jamie expressed his desire to retire some some time ago I started looking for a, you know, a, a CFO for the for the future to help me execute the strategy 2030 Steve is. Is an incredible leader, as you said, the right experience, the right skills, proven record, the right culture fitting the company. And I'm looking forward to welcoming Steve in the next few weeks and you know, continue to accelerate the transformation of the company to to the to the the highs that we know this company will will achieve.
Operator
Thank you one moment for our next question. Our next question comes from Camilo Gargiwala with Jefferies. Your line is open.
Camilo Gargiwala
Hey, everybody. First of all, Jamie, thank you for all your help over the I guess what's now been decades. And Ramon, a question on asset based and, and sort of following on with some of the answers to your questions on One North America maybe being regional, a focus on agility, a focus on being fat. There's a lot going on in terms of innovation and rightsizing.
To what degree are you open to the idea of franchising some of these operations on the beverage side, particularly, you know, maybe just from a regional perspective? Because it it feels like many of the many of the intentions of what you're looking to accomplish, some of could be some of could be moved along by pushing a sort of a refranchising initiative. So curious what you think about that. Thanks.
Ramon Laguarta
Yeah, they said we're, as I said, we're going after growth and margin with high speed and a very strong sense of urgency. We are at this point we're open to all the ideas and we appreciate all the perspectives to create sure how shareholder value. So you know, we'll listen, we'll do what's best for PepsiCo.
But as I'm thinking about this or we think about this space of supply chain go to market, as I said earlier, the the solution for this country talking US will not be A1 size fits all solution. So there'll be nuance, there will be potential different geographical solutions that will be the best, the best fit for that market given our market position, starting market position, the partners and everything else that that we can do.
Now as I'm thinking about this topic there, there's three things that we're taking into consideration and I'd like for you to to be aware. One is the we're trying to solve for the demand of the future, not the demand of the past. And the demand of the future will be much more concentrated in a few retailers or power or customers.
And we need to assume the consumer will be looking for pickup or delivery and digital much more than it is today. It is today very high, it will be even better. So we need to solve for that demand of the future that will be different from the demand of the past. The second is technology and the investment we've made in technology over the last five years helps allows us to do things that were unthinkable five years ago.
If you think about a lot of the basic processes of the company from order taking to transportation towers to how we we can do you know, manufacturing or warehousing is totally different than the past. So we can manage complexity different. We can eliminate some of the human bottlenecks in ways that we couldn't do before for technology demand of the future.
And the Third Point is I'm trying to optimize the full PepsiCo PNL and not just one or the other. So as we think of that, we will have for sure a nuance solution. We will be driving different solutions, different parts of the country and we'll be looking for what is the best for PepsiCo long term. We'll listen to every perspective. We'll we'll have constructive dialogues and I'm sure we'll come up with the best solution for for this company going forward.
Operator
Thank you. One moment for our next question. Our next question comes from Chris Carey with Wells Fargo Securities. Your line is open.
Chris Carey
Hey, everyone. So yeah, most, most ground has been covered. So maybe just to take a step back, Ramon, I'd love to get your thoughts on something around cyclical versus structural. But really by geography, I think in North America, you know, there's a, there's an ongoing debate about how much of this is the consumer shifting preferences, you know, toward healthier eating. Obviously there's a cyclical component as well with value seeking.
Can you compare, you know, the, the consumer behavior in the US, this cyclical versus structural dynamic versus what you see in the international markets is, is the consumer there behaving in similar ways, you know, both from an economic perspective? Number one, but also, you know, are the preferences for the international consumer outside the US shifting and evolving like they are in the the North American business. So I I love to get any you know, context or or additional color on, on how you see that interplay. Thanks.
Ramon Laguarta
Yeah. So listen, the clearly is a very, it's a complex topic, but I'll give you my point of view in a couple of areas there. There are things that are clearly structural in the way we should think about consumers all over the world. I think consumers are moving to digital purchasing in a very structural way and that will change the dynamics of the industry in the both the assortment, what they buy, how they buy and what they expect the delivery method method to be.
I think consumers are going to expect different ways of, you know, how how goods are delivered to them. So that is a very structural change and that's happening across the world with different speeds. But I think it's a, it's clearly a, a global, a global, you know, trend. The second, I would say in terms of the consumers are much more informed about, you know, the food and the drinks, the ingredients in the foods and the drinks.
And I think it's, it's, you know, it's, it's a, it's a secular trend as well that consumers will be more, you know, making choices based on clean labels, based on, you know, the ingredients in the food and, and, and you know, not only the taste, but also, you know, the type of food that is in the brands. And therefore some of the relaunches of the brands that we're making, whether it's Lace or Gatorade or Tostitos, you know, take that into consideration because I think they're very relevant going forward.
And then affordability is also a reality. I think that when you look at, you know, low income households or middle income households, they're very stretched, fixed cost of living are going up around the world. And that that will create the need for affordability and, and value and price points and, and cost consciousness, you know, also for the foreseeable future.
So those are trends that they will go up and down, you know, not just in, in, in the curve, but I think the curve is going in the same direction probably in the majority of the markets. And that's my my point of view. That's how we're thinking about the future and that's why we're moving their portfolio quickly in those spaces. We're looking at the cost structure to be able to compete both on the cost side, but also on how we serve our customers in this, you know, in this future of demand that will be very different from today.
Operator
Thank you. One moment for our next question. Our last question comes from Robert Moscow with TD Cowan. Your line is open.
Robert Moscow
Hi, thanks for the question. You know, a few weeks ago an activist investor announced a stake in your stock and and published a long list of recommendations. So I wanted to know, you know, your, your willingness to engage with them and, and if there's any ideas in there that you think are particularly important for your strategic direction.
One in particular I wanted to know is establishing A margin target for Frito Lay. You know, it's been discussed in the past. I just want to know is, is that something that, that you consider constructive for setting a path for the future or you, you just look at the, the business and, and what it needs to do differently than that? Thanks.
Ramon Laguarta
Yeah, listen, a few questions in your question. So our our engagement with Elliot has been, you know, we had a couple of, you know, interactions very constructive and collaborative and we're we're, we're trying to understand each other. I think we're aligned on on one thing which is critical, which is PepsiCo is undervalued and there's a lot of opportunities to improve the valuation of the company by, you know, making a few interventions with a sense of urgency and, and the way we're doing.
So I think we're both want to create shareholder value. We're as interested as any of our investors to do this. So we're aligned now of all the ideas that Elliot mentioned in their in their document, most of them are included in our strategy 2030 and we're acting on it. So I think we're we're acting with a sense of urgency on both portfolio transformation, simplification of the portfolio, cost reduction to invest in future growth, etcetera, etcetera.
You know, a lot of, a lot of positives. There's a few areas where, you know, we, we need to probably educate each other a bit more. We're going to have conversations in the coming weeks and months. And I'm sure we'll, we'll reach a point where, you know, they will, they will, you know, we'll listen to their perspective. They will help us, you know, in our, in our decisions to make PepsiCo a, a better company and to create value for the long term.
So, yeah, good, good, good, good, good collaboration and I I'm optimistic about, you know how this will drive sense of urgency and will drive positive change for PepsiCo.
Ramon Laguarta
Good. OK, so this concludes the the meeting. Thank you very much to everybody for your engagement. And again, I would like to thank Jamie for, you know, the incredible work for PepsiCo for 33 years and support he's given me and the management team, you know, for all those years, but in particular the last two years. So thank you. And Jamie, I don't ever want to say anything to the team here.
Jamie Caulfield
No, just just thank you. It's it's been a terrific, terrific run. And this is a great company. I continue to believe our best days are ahead of us. Thank you.
Operator
Thank you, ladies and gentlemen. Let's conclude today's presentation. You may now disconnect and have a wonderful day.
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