Consumers across Europe, Asia Pacific and China shelled out money for PepsiCo's pricey sodas and chips, while customers in the U.S. cut back on the products due to strained budgets.
"We've had three years of ... massive consumer inflation and that has to be absorbed and I think the cumulative impact of that put a bit of strain on the consumer. But we expect that to abate as time goes on," PepsiCo CFO Jamie Caulfield said.
The company's average prices jumped 5% in the first quarter. Its organic volume slipped 2%, compared to a 4% drop seen in the fourth quarter.
International business accounted for about 40% of PepsiCo's fiscal 2023 revenue, while its North America businesses accounted for the remaining.
PepsiCo has been expanding its portfolio in developed and emerging markets to drive demand by launching items such as flavored Quaker instant oats and Celsius energy drink, CEO Ramon Laguarta said.
Shares of the company, which also maintained its fiscal 2024 forecasts, fell 1.5%.
First-quarter sales at PepsiCo's largest business, its North America beverage unit, rose 1%, while organic volume fell 5%.
Total sales at its Quaker Foods North America unit fell 24% following Quaker product recalls first made in December in the U.S. due to a potential salmonella contamination.
PepsiCo expects its North America businesses to gradually improve as impacts associated with product recalls moderate.
The company's first-quarter net revenue rose 2.3% to $18.25 billion, beating LSEG estimates of $18.07 billion. PepsiCo's core profit of $1.61 per share topped expectations of $1.52.
"This is going to be another year of price-led revenue growth even though pricing has come down," Wedbush analyst Gerald Pascarelli said.
