PepsiCo’s top executive did not sugarcoat things on the company’s latest earnings call.
Chairman and CEO Ramon Laguarta told analysts that the war in Iran has pushed gas prices higher, and that is changing how Americans shop.
The comments came during Pepsi’s (PEP) second quarter 2026 earnings call on July 9.
The world’s second-largest food and beverage company still posted strong growth. But Laguarta made clear that shoppers are feeling squeezed, especially at convenience stores and gas stations.
Gas prices are changing how people shop
Laguarta pointed directly to the conflict in Iran as a factor hurting consumer spending. “The Iran war and the impact on gas prices has been meaningful, not only in the U.S. but across the world.”
He explained that shoppers in the U.S. are pulling back in specific ways. People are stopping at gas stations and convenience stores less often, and when they do stop, they are buying less.
“We’ve seen a slowdown of the conversion of traffic into purchases,” Laguarta said, referring to convenience stores and other outlets tied closely to gas prices.
This channel is a key driver for Pepsi.
Chips, sodas, and energy drinks are grab-and-go purchases, and gas stations are among the biggest places people buy them on impulse. When gas costs more, that extra spending money disappears fast.
Chief Financial Officer Stephen Schmitt backed this up with the numbers. He said PepsiCo’s North American beverage business saw its operating margin fall about 90 basis points in the quarter.
Part of that drop came from weaker sales in convenience and gas channels.
Pepsi eyes $40B international milestone
Even with the gas price problem, PepsiCo’s overall results were far from bad.
- Schmitt said net revenue for the company grew 7% in the first half of 2026.
- Reported earnings per share grew 6% over the same period, while currency-adjusted earnings per share grew 3%.
- Global volumes also grew, and Laguarta called it the fastest volume growth PepsiCo has seen since 2022.
- Foods volume rose 3% worldwide, while beverage volume rose 2%.
International markets are carrying much of that growth. Laguarta said the company’s international business will cross $40 billion in revenue this year.
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He noted that international beverage volumes now account for two-thirds of the company’s total volume, and international foods for more than half.
Interestingly, some international markets facing similar gas price pressure, including Vietnam, Thailand, China, and parts of the Middle East, held up better than expected.
“The truth is that all those markets have remained very resilient,” Laguarta said.
Gas prices will weigh on Pepsi sales
Looking ahead, PepsiCo is not counting on gas prices to drop anytime soon.
Laguarta said the company cannot control oil prices, so it is focused on things it can control.
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That includes working with retail partners on bundle deals and meal combinations designed to get gas station customers to buy more once they are already in the store.
“We continue to invest in affordability,” Laguarta said. “We’re working with our customer partners in solutions to convert more of the traffic in the store.”
Schmitt added that PepsiCo expects roughly a 1-point boost in earnings-per-share growth in the second half of the year from tariff refund claims tied to payments made last year.
That extra cash is expected to help offset rising commodity costs.
The company kept its full-year guidance in place, though Schmitt said results may land toward the lower end of its earnings range.
He also said profit improvement is likely to be more gradual in North America than originally expected, with the beverage business recovering faster than the foods business.
For now, PepsiCo’s message to investors is steady rather than alarming.
International growth is offsetting a softer U.S. picture, and management believes the gas price pressure hurting convenience store traffic will ease once energy costs come down.
Until then, the company is leaning on bundled offers and cost-cutting to keep sales moving in its toughest U.S. channels.
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