North America, Processing, fries, chips

PepsiCo’s Frito-Lay North America reports strong performance amid economic challenges

PepsiCo Inc. announced its fourth quarter and full-year results for 2023 on September 9, highlighting amongst others the robust performance of its Frito-Lay North America division despite facing a year marked by significant economic and geopolitical challenges.

Chairman and CEO Ramon Laguarta expressed satisfaction with the company’s 2023 performance, stating, “We are pleased with our results for 2023 as we successfully navigated another year of elevated levels of inflation, macroeconomic volatility, geopolitical tensions, and international conflicts.”

He attributed the success to strategic investments made by PepsiCo to strengthen its business and advance its pep+ agenda, focusing on innovation, operations, team empowerment, brand building, and competitive market presence.

Looking ahead to 2024, Laguarta remains confident about PepsiCo’s business prospects. He anticipates normalized category growth rates, a return to pre-pandemic consumer behaviors, and a moderation in net revenue realization as inflationary pressures are expected to ease. PepsiCo plans to focus on delivering great-tasting, convenient, and value-driven products to consumers, while aggressively managing costs and investing in brand innovation, channel expansion, and the pep+ transformation.

The Frito-Lay North America division reported a 2% increase in operating profit for the fourth quarter of 2023, driven primarily by effective net pricing and productivity savings. This increase also reflects a 5-percentage-point favorable impact from prior-year impairment charges associated with a baked fruit convenient food brand and reduced advertising and marketing expenses. However, these gains were partially offset by operating cost increases, strategic initiatives, and higher commodity costs, particularly for cooking oil, seasoning ingredients, and potatoes. The division also faced an organic volume decline.

For the full year of 2023, Frito-Lay North America’s operating profit rose by 10%, again benefiting from effective net pricing, productivity savings, and a 2-percentage-point favorable impact from prior-year impairment charges. Similar to the fourth quarter, the full-year results were impacted by increased operating costs, strategic initiatives, and higher commodity costs.

Source: PepsiCo Inc. Original full report here
Cover image: Credit Frito-Lay

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