Why PepsiCo Shares Fell After a Strong Revenue QuarterPepsiCo, Inc.BATS:PEPmoonyptoPepsiCo reported solid second quarter results, but investors focused on signs that consumers are pulling back. Revenue climbed 6% year over year to $24.2 billion, beating expectations by $230 million. Adjusted EPS came in at $2.20, just one cent below estimates. Organic revenue grew 2.4%, helped by pricing and modest volume growth, while foreign exchange and acquisitions provided an additional boost. Even so, the stock fell more than 3% after the report North America remained the biggest weak spot.. Frito Lay volumes were flat, and revenue slipped 2%, giving back the progress made in the first quarter when volumes had risen 2%. The North American beverage business also struggled, with volumes down 4% and operating margins narrowing by 90 basis points International markets continued to carry the business. PepsiCo expects its international operations to generate more than $40 billion in revenue this year, with Asia Pacific Foods posting double digit volume growth CEO Ramon Laguarta said consumer demand was weaker than the company expected, largely because of higher gas prices. As fuel costs climbed above $4 per gallon during the quarter following the Iran conflict, shoppers cut back on impulse purchases, especially at convenience stores. PepsiCo is adjusting its roughly 15% price reductions across different product categories and also noted that some retailers have been slower than expected to restore shelf space One bright spot was the company's healthier product lineup, including protein-rich snacks and portion controlled multipacks. That business has now reached $3 billion in annual value and continues to grow at a double-digit pace. Meanwhile, activist investor Elliott Management is still pushing the company to speed up its turnaround efforts Looking ahead, PepsiCo reaffirmed its full year fiscal 2026 guidance, expecting organic revenue growth of 2% to 4% and core constant currency EPS growth of 4% to 6%. Management cautioned that earnings are likely to come in near the lower end of that range. The company also expects tariff refunds to add about one percentage point to EPS growth, helping offset higher commodity costs The key question now is whether lower gas prices will bring shoppers back to impulse purchases, or if Frito Lay will need another round of pricing adjustments to revive demand.