Pepsi faces a consumption decline in North America despite recently slashing prices on brands like Lay’s and Doritos by up to 15%|Mike Mozart|CC BY 2.0

Snacks and beverages maker PepsiCo reported mixed results for the second quarter, with CEO Ramon Laguarta stating that consumers are tightening their budgets. Shares dropped over 4% in morning trading.

The company faces a decline in consumption in North America, where food volume flatlined and beverage volume dropped by 4%. This comes despite Pepsi recently slashing prices on brands like Lay’s and Doritos by up to 15%.

Higher expenses and a four-year peak in US gas prices at $4.56 per gallon have reduced consumer spending, with convenience stores feeling the impact through weaker domestic sales.

Despite the softer demand, Pepsi exceeded revenue expectations. Net sales increased 6.4% to $24.18 billion, while organic revenue grew 2.4%. Globally, food volumes rose 3%, and beverage volumes increased 2%.

Looking ahead, Pepsi expects a gradual recovery, reiterating its full-year forecast of 2% to 4% organic revenue growth.