PepsiCo, Inc. (PEP) Business Profile

What it does

PepsiCo is a global beverage and convenient food company. It sells branded drinks, snacks and pantry foods through its own operations, authorized bottlers, contract manufacturers and other third parties. Its portfolio includes Lay’s, Doritos, Cheetos, Gatorade, Pepsi-Cola, Mountain Dew, Quaker and SodaStream.

The company’s food businesses make and sell products such as chips, dips, cereals, granola bars, oatmeal, pasta, rice, syrups and mixes. Its beverage businesses sell finished drinks, concentrates and fountain syrups. These include water, carbonated soft drinks, sports drinks, ready-to-drink tea and coffee, sparkling-water makers and related products. In some markets, PepsiCo also makes dairy products.

It reaches consumers through retailers, foodservice operators, vending, e-commerce and independent bottlers. Depending on the market and product, it may manufacture and deliver finished goods itself, sell concentrate to bottlers, or use distributors and third-party manufacturers. Its direct-store-delivery system takes selected beverages and foods directly to stores, where PepsiCo employees or independent bottlers merchandise them.

The company was founded in 1961 and is headquartered in Purchase. Ramon Laguarta is Chairman and Chief Executive Officer. PepsiCo employed 306,000 people worldwide in FY2025, including approximately 125,000 in the United States.

How it makes money

PepsiCo earns revenue when it sells finished beverages and convenient foods to retailers, distributors, foodservice customers and bottlers. It also sells beverage concentrates and fountain syrups. Independent bottlers manufacture and sell certain drinks bearing PepsiCo trademarks within defined territories; PepsiCo charges them for concentrate, finished goods and Aquafina royalties.

Its six reporting segments divide the business by product and geography. PepsiCo Foods North America covers convenient foods in the United States and Canada, while PepsiCo Beverages North America covers beverages there. International Beverages Franchise sells beverage concentrates to bottlers internationally and includes SodaStream. Europe, Middle East and Africa combines food operations with beverage operations that have company-owned bottlers. Latin America Foods and Asia Pacific Foods are convenient-food businesses.

The food portfolio includes brands such as Cheetos, Doritos, Fritos, Lay’s, Quaker, Ruffles and Tostitos. The North American beverage operation sells concentrates, fountain syrups and finished goods including Pepsi, Mountain Dew, Gatorade, Aquafina, Bubly, Propel and Pepsi Zero Sugar. It also makes or distributes products through arrangements involving Unilever, Starbucks, Keurig Dr Pepper, Dole Food Company, Ocean Spray Cranberries, Celsius Holdings and Tropicana Beverages Group.

Sales recur as retailers, foodservice operators and bottlers reorder products. The company supports distribution and promotion through rebates, placement fees, displays, consumer promotions, advertising support and bottler funding. Demand is seasonal: beverage and convenient-food sales are generally highest in the third quarter and lowest in the first quarter.

Customers and how it sells

PepsiCo serves wholesale and other distributors, foodservice customers, grocery stores, drug stores, convenience stores, discount and dollar stores, mass merchandisers, membership stores, hard discounters, e-commerce retailers and authorized independent bottlers. Its products are sold in more than 200 countries and territories, with its largest operations in the United States, Mexico, Russia, Canada, China, the United Kingdom, Brazil and South Africa.

The route to market varies. Direct-store-delivery is used for products that are replenished frequently or respond to in-store promotions and merchandising. Customer-warehouse delivery moves products from manufacturing plants and distribution centers to customer warehouses at a lower cost than direct-store-delivery. Third-party distributors are used where they add delivery reach, including foodservice and vending customers such as restaurants, businesses, schools and stadiums. Consumers can also buy directly through company-owned and third-party e-commerce sites and mobile applications.

Wal-Mart represented 14.0% of revenue in FY2025. PepsiCo’s sales to Walmart and affiliates, including Sam’s Club, span all segments and include concentrate sold to independent bottlers for finished goods ultimately sold to Walmart. The company states that losing this customer would have a material adverse effect on its PFNA and PBNA segments.

Suppliers and costs

PepsiCo buys agricultural ingredients, sweeteners, flavorings, grains, potatoes, dairy inputs, oils and water for its products. Key packaging inputs include plastic resin, aluminum, glass, closures, cardboard and paperboard cartons. Fuel, electricity and natural gas are also important because they power facilities and delivery vehicles.

Many inputs are purchased in open markets, so costs can fluctuate. PepsiCo uses fixed-price contracts, purchase orders, pricing agreements, swaps and futures to manage commodity-price exposure. It also seeks to reduce sourcing risk by buying certain materials across multiple geographies and suppliers. Some raw materials and packaging materials are available from a limited number of suppliers or a sole supplier, particularly when seasonal demand peaks.

The company manufactures in its own plants and uses bottlers, contract manufacturers, distributors and other third parties. Its cost base includes raw materials, direct labor, plant overhead, purchasing and receiving, production planning, inspection and raw-material handling. Selling, general and administrative costs include distribution, shipping and handling, merchandising, brand marketing and other ongoing operating costs. PepsiCo continued to experience volatility in commodity, packaging and other input costs during 2025, and it may or may not pass cost increases on to customers.

Competitive position

PepsiCo competes in beverage and convenient-food categories against international companies, regional and local producers, private-label manufacturers, economy brands and smaller companies selling micro brands through e-commerce or locally focused retailers. The Coca-Cola Company is PepsiCo’s primary beverage competitor in many countries, including the United States. Other named competitors include The Campbell’s Company, Conagra Brands, Inc., Hormel Foods Corporation, Keurig Dr Pepper Inc., The Kraft Heinz Company, Link Snacks, Inc., Mars, Incorporated, Mondelēz International, Inc., Monster Beverage Corporation, Nestlé S.A., Primo Brands Corporation, Red Bull GmbH and Utz Brands, Inc.

In 2025, PepsiCo and The Coca-Cola Company represented approximately 16% and 20%, respectively, of U.S. liquid refreshment beverage-category estimated retail sales in measured channels. The Coca-Cola Company has a carbonated-soft-drink share advantage in many markets outside the United States. Competition centers on brand recognition and loyalty, taste, price, value, quality, variety, innovation, distribution, shelf space, advertising, marketing, packaging, convenience and service.

Our reading: PepsiCo’s trademarks and broad brand portfolio are a meaningful moat because brands are central to consumer choice and the company owns numerous trademarks used across its worldwide businesses. [item1]

Our reading: Its distribution moat is meaningful because it combines direct-store-delivery, warehouses, distributors, bottlers and e-commerce rather than relying on one route to market. [item1]

Our reading: This moat faces a substantial counterweight in beverages because The Coca-Cola Company has the larger stated U.S. liquid-refreshment share and an international carbonated-soft-drink share advantage. [item1]

Growth opportunities

PepsiCo is pursuing growth through international expansion, portfolio changes, away-from-home occasions, e-commerce, product innovation, and changes to its North American operating model. It is increasing the scale of its international business, with a focus on large and developing markets, while also working to expand foodservice and other away-from-home availability.

The company is reformulating and extending its portfolio through products with lower added sugar, sodium or saturated fat, functional benefits, fiber, whole grains, protein and hydration. It is also developing packaging and SodaStream innovation, digital capabilities and artificial-intelligence tools intended to improve consumer insights, inventory visibility, customer support and sales execution.

Management said on the call that global food volume grew 3% and beverage volume grew 2% in the first half of 2026. Management also said that North American food volume had returned to growth and that the business was gaining volume share in the U.S. salty-snacks category. The company is scaling Naked and Doritos Protein, and management said on the call that supply-chain and customer-execution issues that slowed away-from-home activity in Q2 were accelerating in Q3.

Management said on the call that the international business is expected to exceed $40.0 billion in FY2026. Management also said that poppi was again growing at a good pace after its distributor transition was largely resolved, while Siete ingredient issues affecting April and May had been resolved. PepsiCo is using partnerships with Celsius and Alani Nu to expand its consumer offerings and apply its go-to-market capabilities.

Structural risks

• Consumer demand and portfolio fit. Demand can fall if PepsiCo does not anticipate changes in diet, affordability, channel preferences, product functionality, health perceptions, packaging concerns or consumer use of e-commerce and artificial-intelligence shopping agents.

• Competition and customer relationships. The company operates in highly competitive categories and can be affected if competitors spend more effectively, private label expands, shelf space is reduced, or it cannot maintain relationships with major customers, e-commerce retailers and hard discounters.

• Input costs and supply disruption. Agricultural commodities, packaging, fuel, transportation and labor can be volatile. Weather, tariffs, geopolitical events, supplier constraints, strikes, cyber incidents and disruptions at manufacturing sites can raise costs or interrupt supply.

• Product quality and reputation. Recalls, alleged mislabeling, allergens, contamination, product-safety issues or concerns over ingredients and processing can bring costs, lost sales, inspections, litigation, reduced consumer confidence and reputational damage.

• Water, regulation and environmental requirements. Water scarcity can disrupt operations and raise production or capital costs. Taxes, labeling restrictions, marketing limits, packaging rules, recycling requirements and environmental regulations can alter costs and how products are sold.

• International operations and political conditions. Currency controls, exchange-rate movements, sanctions, tariffs, civil unrest, conflicts, inflation, restrictions on funds and changes in law can affect overseas operations and the ability to grow in developing and emerging markets.

Bottom line

Our reading

Our reading: PepsiCo is a branded consumer-products business that combines beverages with convenient foods and sells through company operations, bottlers, distributors and retailers across more than 200 countries and territories. [item1]

Our reading: Its operating model rests on repeat purchases, trademarks and multiple distribution routes, while exposure to commodity costs, major customers, regulation, changing consumer preferences and intense beverage competition remains material. [item1] [item1a]

Our reading: International expansion, portfolio reformulation, protein and portion-control platforms, and away-from-home distribution are the stated avenues for growth, alongside continuing North American execution work. [item7] [call_qa]