PepsiCo says North American customers are pulling back as gas prices squeeze demand

PepsiCo reported stronger second-quarter revenue and earnings, but the result was overshadowed by weaker demand in North America as higher gas prices and tighter household budgets curbed impulse purchases.

The company said revenue rose 6.4% from a year earlier to $24.18 billion. Adjusted earnings came in at $2.20 a share, slightly above analyst expectations. PepsiCo also reaffirmed its full-year guidance for 2026.

North American weakness

Chief executive Ramon Laguarta said consumer demand in North America was weaker than the company expected. He pointed to higher gas prices as a key factor, saying the pressure was showing up most clearly in the kinds of unplanned purchases consumers make at gas stations and convenience stores.

PepsiCo said North American snack sales were flat in the quarter, while beverage volume in the region fell 4%. The company said impulse purchases were especially weak in the channels most exposed to fuel-related traffic.

That matters because North America is the company’s core market for both snacks and beverages. Investors have been watching whether PepsiCo can protect volume while still using pricing and package changes to defend margins.

What drove the quarter

International business helped offset some of the pressure at home. PepsiCo said its global organic volume increased at the fastest rate since 2022, and that international segments drove much of the quarter’s growth.

The stronger overseas performance gave the company a cushion, but it did not erase the signal from the U.S. market. The company’s comments suggest the slowdown is not just a pricing issue; it also reflects a consumer who is being more selective about everyday purchases.

PepsiCo has been trying to answer that with more affordable pack sizes, meal bundles and additional shelf space. The company has also been cutting prices on some snack brands in recent quarters to defend traffic and market share.

What investors are watching

Market attention now turns to whether gas prices ease and whether North American beverage and snack volumes stabilize in the next quarter. If fuel costs stay elevated, PepsiCo could keep seeing pressure on the spontaneous purchases that help drive convenience and impulse sales.

The company’s bigger challenge is whether affordability efforts can lift traffic without weakening the revenue mix. PepsiCo will also be judged on whether it can keep translating international strength into overall growth if U.S. consumers remain under strain.

For now, the earnings beat and reaffirmed outlook show the business still has momentum. But the North American slowdown leaves open a central question for the rest of the year: how much longer can the company offset soft U.S. demand with growth elsewhere?