PepsiCo's International Business Shines: Can It Reignite Performance?

PepsiCo, Inc.’s PEP international business is a cornerstone of its global strategy and long-term growth strategy. In first-quarter 2025, its international business delivered 5% organic revenue growth, marking the 16th consecutive quarter of at least mid-single-digit growth, despite ongoing geopolitical and macroeconomic challenges. Strong international demand for products like Tropicana juices and Cheetos helped to offset the slowdown in the U.S. market. This business is also central to PepsiCo’s diversification efforts, contributing nearly 40% of the company’s total 2024 net revenues and core operating profit, and representing a significant portion of its nearly $37 billion international portfolio.

PepsiCo’s international beverages business led the performance, achieving 11% organic growth in first-quarter 2025, driven by robust demand in key markets including China, India, Egypt, Turkey, Mexico, Brazil, the U.K. and Australia, alongside market share gains in Germany, France, Spain and South Korea. Meanwhile, the company’s international convenient foods business grew 2% organically, driven by strength in markets like Brazil, Egypt, India and Turkey, and complemented by snack share gains in China, South Africa, Poland and Thailand. These results highlight the company’s ability to tailor products to local preferences while strengthening market share across both beverages and snacks in a broad array of global regions.

Looking ahead, PepsiCo plans to build its global momentum by scaling its international presence and deepening its localization efforts. This includes adapting its product offerings to suit regional tastes, modifying price-pack architectures to provide greater consumer value and expanding channel reach. The company also aims to elevate productivity through investments in automation, digitalization and standardization across global operations, freeing up capital to reinvest in commercial initiatives and innovation.

PepsiCo’s international growth strategy is focused on long-term profitability through sustained product innovation, market-specific customization and operational efficiency. Despite near-term headwinds from foreign exchange and supply chain inflation, particularly due to tariffs and input sourcing challenges, the company remains confident in the resilience and scalability of its global model. With a firm commitment to adaptability and efficiency, PepsiCo’s international operations continue to play an essential role in supporting its broader strategic and financial goals.

PEP’s Competition in the International Market

The Coca-Cola Company KO and Monster Beverage MNST are the key beverage companies competing with PepsiCo in the global arena.

Coca-Cola, a leading beverage company, is PepsiCo’s key competitor in the international market. Coca-Cola and PepsiCo compete directly in several international markets, including India, China, Brazil and Mexico. In these regions, both companies vie for market share in the non-alcoholic beverage sector, employing strategies tailored to local consumer preferences and leveraging their extensive distribution networks. Coca-Cola's international strategy focuses on being a "Total Beverage Company," expanding beyond carbonated drinks to include juices, dairy, plant-based beverages and energy drinks. Regionally, Coca-Cola’s market share is particularly strong in Latin America (61.8%), Western Europe (51.8%) and the Asia-Pacific region (50.9%). This dominance is attributed to its strategic localization efforts, adapting products to suit regional tastes and preferences. Coca-Cola's international business remains a critical driver of its global performance, contributing approximately 61.3% of its total revenues in 2024.

Monster Beverage’s international business continues to be a key growth driver, contributing approximately 39.6% of its total revenues in the first quarter of 2025. Strategically, MNST is focused on expanding its international footprint through product launches in key markets such as China, India and the EMEA region. The development of a juice production facility in Ireland is part of its efforts to bolster growth and regional efficiencies. These initiatives aim to enhance Monster Beverage's global presence and adapt to regional consumer preferences. Monster Beverage's international operations overlap with PepsiCo's in several key markets, including China, India and Mexico. In these regions, both companies compete in the energy drink segment, with PepsiCo's Rockstar brand and MNST’s diverse offerings like Reign, Bang and NOS vying for market share. This competition underscores the dynamic nature of the global energy drink market and the strategic importance of these regions for both companies.

PEP’s Price Performance, Valuation and Estimates

Shares of PepsiCo have lost around 13.5% year to date against the industry’s growth of 6.9%.

From a valuation standpoint, PEP trades at a forward price-to-earnings ratio of 16.33X, significantly below the industry’s average of 18.59X.

The Zacks Consensus Estimate for PEP’s 2025 earnings implies a year-over-year decline of 3.6%, whereas its 2026 earnings estimate suggests a year-over-year uptick of 5.4%. The estimates for 2025 and 2026 have been southbound in the past 30 days.

PEP stock currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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