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PepsiCo is the second-largest food company in the world and one of the most lucrative due to its popular food, snack, and beverage brands, which are consumed in over 200 countries and territories.
Although PepsiCo's brands, including Lay's, Gatorade, PopCorners, Quaker Oats, and Pepsi, have become household names, the company was not immune to the effects of increasing competition and ever-evolving consumer trends.
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According to PepsiCo's fourth-quarter earnings report for 2024, net revenues fell 0.2% compared to the same period last year.
Its North American market is especially experiencing some of the worst times, with Frito-Lay North America revenues down 2%, Quaker Foods North America declining 2%, and PepsiCo Beverages remaining flat compared to the year prior.
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These continuous concerning declines have caused PepsiCo to take extreme measures over the last few months to reduce costs and make ends meet.
Last year, PepsiCo closed its Quaker Oats factory in Danville, Illinois, laying off 131 workers and four bottling plants in Cincinnati, Harrisburg, Pennsylvania, and Atlanta, cutting nearly 400 jobs.
With 2025 just beginning, it didn't take long for the company to target yet another plant to kick off the year.
PepsiCo acquires PopCorners to grow its healthier snack portfolio amid declines
Over the last few years, PepsiCo (PEP) has emphasized the growing consumer demand for healthier snacks in the U.S. This has prompted the company to make multiple investments that better align with this trend.
In 2019, PepsiCo sealed a deal with BFY Brands to acquire the corn-based snack brand PopCorners to expand its healthier snack portfolio. As part of the agreement, the company also gained ownership of its manufacturing plant in Liberty, New York.
However, its investments and strategies hasn't been as fruitful as expected.
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As reported in its latest earnings, Frito-Lay North America's operating profit decreased 11% in the fourth quarter and 7% for the full year of 2024. PepsiCo attributes the sharp declines to operating cost increases, including strategic initiatives, decreased organic volume, and a 5-percentage-point impact of higher restructuring charges.
However, nearly six years after acquiring the Liberty plant, PepsiCo made an unexpected decision as it has struggled with continuous sales slowdowns over the last few quarters.