Coke is still daddy… fight me.

The soda company that’s been playing second fiddle since Eisenhower was president somehow beat earnings again. PepsiCo posted better-than-expected Q3 numbers thanks to international sales keeping the lights on while North America continues its slow-motion collapse. The numbers look fine on paper, $23.9B revenue, $2.29 EPS, margins stable… but don't mistake that for strength. U.S. volume fell across snacks, sodas, and anything that isn’t an “Olive-Oil-infused-Non-Synthetic-Dorito.” In other words, Pepsi’s main growth lever now is charging more for less, while lecturing you about “health.”

(Source: Giphy) 

In short, CEO Ramon Laguarta called it “resilient international performance.” Translation: people outside the U.S. still like sugar and don’t care what RFK Jr. thinks about seed oils.

Domestic consumers, on the other hand, are tightening wallets and getting weird about ingredients. Pepsi’s answer, of course, is smaller bags, new packaging that screams “no artificial colors,” and an upcoming line called Doritos Protein… presumably of which will be sold in Costco and make “We Bring the Boom” by the Costco Guys even more insufferable. 

(Source: CNBC) 

With that said, we also have Elliot Management,  now holding a $4 billion stake and pressuring Pepsi to stop pretending to be Whole Foods. They want bottling divestitures, sharper pricing, and actual capital discipline… in short, less millennial, and more profit. And they’re not wrong. Pepsi’s U.S. snack unit saw 4% volume, beverage volume 3%, while the company still insists it can “deliver improved growth and profitability trends.” Meanwhile, CFO Jamie Caulfield is retiring and being replaced by Walmart U.S. CFO Steve Schmitt, which tells you exactly where this is going. Walmart math, Walmart margins, Walmart portions.

And yet, while Pepsi spent the quarter debating seed oils, Coca-Cola quietly outperformed, kept its branding intact, and didn’t need to invent protein chips to stay relevant. Pepsi’s chasing every trend at once (read: energy drinks, prebiotic sodas, fake-healthy snacks) and calling it a portfolio refresh. Coke, on the other hand, continues to milk its moat of selling diabeetus in a can. 

(Source: Giphy) 

So WTF does this mean for fashion investors like you and I? It means Pepsi’s business model now relies on three things: #1. Inflation driven illusion, international sugar exports, and activist babysitting. Sure, Pepsi can preach innovation all it wants, but at its core it’s still a soda company trying to impress a country that moved on to Celsius and creatine (kinda kidding kinda not). But alas, Pepsi beat earnings… that’s the main headline. But for now, the main reason and only reason… is that foreigners still like to drink 48oz bottles of syrup before lunch. Until next time, friends… 

At the time of publishing, Stocks.News holds positions in Pepsi and Coca-Cola as mentioned in the article.