Six months ago, the narrative around PepsiCo was that the hard medicine was working.
Activist investor Elliott Management had forced a restructuring plan in December 2025, and by Q1 2026 there were early signs of life — organic revenue ticking up, North American snack volumes returning to growth, management projecting confidence. The “Elliott turnaround” was on track.
Then came second-quarter 2026 earnings.
North American beverage volume fell 4%. North American foods revenue dropped 2% on flat volume. Pepsi cola continued losing market share. Full-year EPS guidance was reaffirmed — but management told analysts to expect results at the low end of its range. The stock, which had already been grinding lower for years, fell further toward its 52-week low.
The explanation from Chairman and CEO Ramon Laguarta (pictured above): gas prices.
“I think the consumer is worse than what we had anticipated, and it’s driven mainly by gas prices,” he said on the earnings call.
CFO Steve Schmitt added that the company needs “some tailwinds from gas prices” to revive its convenience store business.
Wall Street was not impressed. Citi downgraded PepsiCo to Hold, cutting its price target from $170 to $145 and warning that management’s path back to the high end of its guidance range “calls for a big Q4 rebound in North America” that current trends do not support. Bank of America trimmed its target as well, citing weak performance across Lay’s, Doritos, Tostitos, Cheetos, and Ruffles and a North American recovery that will “take longer to materialize.”
The gasoline prices argument is difficult to take seriously when Coca-Cola — competing for the same consumer dollars in the same convenience stores — reported organic revenue growth of 10% in Q1 2026, with EPS up 18%. Keurig Dr Pepper, whose Dr Pepper brand dethroned Pepsi cola from second place in U.S. soda rankings and watched Sprite push it to fourth, reported U.S. Refreshment Beverage-driven net sales growth of 9.4% in Q1. Both companies face the same gas prices. Neither is struggling the way PepsiCo’s North American business is.
This is precisely the scenario NLPC warned about when it circulated a solicitation report to PepsiCo investors ahead of the company’s May 6 annual meeting. Our proposal called for an independent Chair of the Board — someone structurally empowered to hold the CEO accountable without the fundamental conflict of being the same person wearing both hats.
The report argued that it should not have required a $4 billion activist intervention to generate the kind of strategic urgency a genuinely independent board should have been demanding for years.
The Q2 results validate that argument more forcefully than NLPC could have anticipated. The restructuring Elliott forced is now six months old, and the company’s CEO is attributing its North American struggles to external conditions that his competitors are navigating with seemingly less difficulty.
NLPC’s proposal did not pass. PepsiCo’s board remains chaired by the same executive it is supposed to oversee. And so the pattern continues: Laguarta sets the agenda, chairs the meetings, evaluates his own performance, and when the results disappoint, explains them as the product of circumstances beyond his control.
The board that might otherwise press him on that explanation is presided over by the person giving it.
Coca-Cola reports Q2 earnings on July 28. Keurig Dr Pepper reports on August 6. If current trajectories hold, the contrast with PepsiCo’s North American performance will be even sharper than it is today — and the question of who is responsible, and who is asking, will be harder than ever to avoid.
