PepsiCo lowers full-year earnings forecast on tariff costs and lower
consumer spending
[April 25, 2025] By
DEE-ANN DURBIN
PepsiCo lowered its full-year earnings expectations Thursday, citing
increased costs from tariffs and a pullback in consumer spending.
The maker of Pepsi beverages and Frito-Lay snacks also said Thursday it
plans to accelerate a shift to natural flavors and colors in its food
and drinks. Earlier this week, U.S. health officials — including Health
Secretary Robert F. Kennedy Jr. — urged companies to phase out
petroleum-based artificial colors.
PepsiCo CEO Ramon Laguarta said 60% of PepsiCo's business is already
free of artificial colors, and the Lays and Tostitos brands will phase
them out by the end of this year. He said the company plans to phase out
artificial colors — or at least offer consumers a natural alternative —
over the next few years.
“We stand by the science. Our products are very safe and there’s nothing
to worry about,” Laguarta said in a conference call with investors. “But
we understand that there’s going to be, probably, a consumer demand for
more natural ingredients.”
PepsiCo said it now expects its adjusted earnings per share to be even
with last year, when it reported a full-year adjusted profit of $8.16
per share. Previously it expected mid-single-digit percentage growth.
A 25% tariff on imported aluminum is among those hitting PepsiCo and
other beverage makers.
But PepsiCo is also more vulnerable than some rivals because it makes
much of its concentrate for the U.S. market in Ireland, which is now
subject to a 10% tariff. Rival Keurig Dr Pepper, which makes concentrate
for the North American market in St. Louis and Ireland, reaffirmed its
full-year adjusted earnings guidance Thursday despite tariff pressures.
“We’ve factored in what we know about tariffs today, and we factored in
mitigation plans," PepsiCo Chief Financial Officer Jamie Caulfield said
Thursday in a conference call with investors. “Some of those will be
able to execute more quickly. Some of those will take more time to
execute.”
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Plastic bottles of Pepsi are displayed at a grocery store in New
York on Nov. 15, 2023. (AP Photo/Ted Shaffrey, File)
 The company didn't provide details
of how it plans to mitigate tariffs.
PepsiCo said in February that years of double-digit price increases
and changing consumer tastes had weakened demand for its snacks and
drinks. Caulfield noted that U.S. consumer confidence has only
worsened since then.
“We probably aren’t feeling as good about the consumer now as we
were a few months ago,” Caulfield said.
The company has responded by investing more heavily in value brands,
like Chester's and Santitas, and adding more promotions and value
packs. It also burnished its health credentials last month by
purchasing Poppi, a popular prebiotic soda brand, for $1.95 billion.
PepsiCo said it expects “elevated levels of volatility and
uncertainty” for the rest of this year. Geopolitical tensions are
impacting sales in some markets, the company said. Sales in China
have been lagging, but India and Brazil were bright spots in the
first quarter.
PepsiCo’s net revenue fell 1.8% to $17.9 billion in the first
quarter as its sales volumes dropped around the world. That was
slightly higher than the $17.8 billion Wall Street was expecting,
according to analysts polled by FactSet.
The Purchase, New York, company’s net income fell 10% to $1.8
billion. Adjusted for one-time items, PepsiCo earned $1.48 per
share. That was slightly lower than the $1.49 analysts forecast.
Shares of PepsiCo slipped 3% in morning trading Thursday.
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