PepsiCo CEO's pessimistic warning: US inflation is making a comeback, consumers are starting to cut back on spending.

PepsiCo's latest financial report and executive comments send a clear signal: U.S. consumer resilience is facing a new round of inflation tests, and the growth previously driven by promotions is unsustainable.

On July 9, CEO Ramon Laguarta noted in the earnings statement that U.S. input cost inflation in the second half will rise further compared to the first half, consumer budgets remain under pressure, and the overall food and beverage category is slowing. This assessment is also reflected in Q2 data: quarterly revenue rose 6.4% year-over-year to $24.2 billion, beating market expectations, but the North America snacks business saw a significant slowdown in growth after the Super Bowl promotion faded, with weakening organic growth momentum.

Despite pressure in its core market, PepsiCo maintained its full-year guidance, mainly thanks to overseas market growth and production efficiency improvements. The company expects to offset a significant portion of the second-half cost pressure through cost optimization and tariff refund applications.

Promotion fade-out and cost pressure: PepsiCo's North America business slides again in Q2

The report shows that PepsiCo's North America snacks business (including brands such as Lay's and Doritos) saw flat sales quarter-over-quarter in Q2, with organic revenue down 2%, a sharp contrast to Q1. Earlier, the company used Super Bowl marketing to cut prices on some snacks by up to 15%, temporarily driving a rebound in both sales and revenue; but entering Q2, the promotional stimulus quickly faded, and growth returned to weakness.

Meanwhile, retailers have also proactively joined the price cuts. This week, Walmart announced price reductions on a variety of grocery items, including 8-ounce bags of Lay's potato chips and 24-can packs of Pepsi, Diet Pepsi, and Diet Mountain Dew. The price cuts at the retail level further reflect weakening consumer demand.

Cost-side pressure is also rising. Recent renewed tensions between the U.S. and Iran have pushed international oil prices to about $80 per barrel, putting new upward pressure on packaging, transportation, and raw material costs, making PepsiCo more cautious about the cost outlook for the second half. On the demand side, the packaged food industry also faces long-term structural challenges, including declining consumer interest in processed foods and the ongoing squeeze on snack and beverage consumption from the popularity of GLP-1 weight-loss drugs.

However, international markets continued to grow steadily, providing important support for PepsiCo's better-than-expected performance this quarter. Looking ahead to the full year, the company maintained its previous guidance, expecting organic revenue growth of 2%-4% in 2026 and EPS growth of 4%-6%.

But the signal from management is clear: U.S. consumers are once again being hit by inflation, and spending is becoming cautious. Under the multiple pressures of fading promotional benefits, rising costs, and changing demand structure, PepsiCo's growth resilience in the second half will face a real test.

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