v3.25.4
Basis of Presentation and Our Segments
 12 Months Ended
Dec. 27, 2025
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis Of Presentation and Our Divisions Basis of Presentation and Our Segments
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with GAAP and include the consolidated accounts of PepsiCo, Inc. and the affiliates that we control. In addition, we include our share of the results of certain other affiliates using the equity method based on our economic ownership interest, our ability to exercise significant influence over the operating or financial decisions of these affiliates or our ability to direct their economic resources. We do not control these other affiliates, as our ownership in these other affiliates is generally 50% or less. Intercompany balances and transactions are eliminated. As a result of exchange restrictions and other operating restrictions, during the periods presented, we did not have control over our Venezuelan subsidiaries. As such, our Venezuelan subsidiaries are not included within our consolidated financial results for any period presented.
Raw materials, direct labor and plant overhead, as well as purchasing and receiving costs, costs directly related to production planning, inspection costs and raw materials handling facilities, are included in cost of sales. The costs of moving, storing and delivering finished product, including merchandising activities, are included in selling, general and administrative expenses.
The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and liabilities. Estimates are used in determining, among other items, sales incentives accruals, tax reserves, share-based compensation, pension and retiree medical accruals, amounts and useful lives for intangible assets and future cash flows associated with impairment testing for indefinite-lived intangible assets, goodwill and other long-lived assets. We evaluate our estimates on an ongoing basis using our historical experience, as well as other factors we believe appropriate under the circumstances, such as current economic conditions, and adjust or revise our estimates as circumstances change. Additionally, the business and economic uncertainty resulting from volatile geopolitical conditions and changes in the interest rate and inflationary cost environment have made such estimates and assumptions more difficult to calculate. As future events and their effect cannot be determined with precision, actual results could differ significantly from those estimates.
Our fiscal year ends on the last Saturday of each December, resulting in a 53rd reporting week every five or six years. While our North America financial results are reported on a weekly calendar basis, our international operations are reported on a monthly calendar basis. The following chart details our quarterly reporting schedule:
QuarterUnited States and CanadaInternational
First Quarter12 weeksJanuary and February
Second Quarter12 weeksMarch, April and May
Third Quarter12 weeksJune, July and August
Fourth Quarter16 weeksSeptember, October, November and December
Unless otherwise noted, tabular dollars are in millions, except per share amounts. All per share amounts reflect common per share amounts, assume dilution unless otherwise noted, and are based on unrounded amounts. Certain reclassifications were made to the prior year’s consolidated financial statements to conform to the current year presentation.
Our Segments
We are organized into six reportable segments, as follows:
1)PepsiCo Foods North America (PFNA), which includes all of our convenient food businesses in the United States and Canada;
2)PepsiCo Beverages North America (PBNA), which includes all of our beverage businesses in the United States and Canada;
3)International Beverages Franchise (IB Franchise), which includes our international franchise beverage businesses, as well as our SodaStream business;
4)Europe, Middle East and Africa (EMEA), which includes our convenient food businesses and our beverage businesses with company-owned bottlers in Europe, the Middle East and Africa;
5)Latin America Foods (LatAm Foods), which includes all of our convenient food businesses in Latin America; and
6)Asia Pacific Foods, which consists of our convenient food businesses in Asia Pacific, including China, Australia and New Zealand, as well as India.
Through our operations, authorized bottlers, contract manufacturers and other third parties, we make, market, distribute and sell a wide variety of beverages and convenient foods, serving customers and consumers in more than 200 countries and territories with our largest operations in the United States, Mexico, Russia, Canada, China, the United Kingdom, Brazil and South Africa.
The accounting policies for the segments are the same as those described in Note 2, except for the following allocation methodologies:
•share-based compensation expense;
•pension and retiree medical expense; and
•derivatives.
Share-Based Compensation Expense
Our segments are held accountable for share-based compensation expense and, therefore, this expense is allocated to our segments as an incremental employee compensation cost. The expense allocated to our segments excludes any impact of changes in our assumptions during the year which reflect market conditions over which segment management has no control. Therefore, any variances between allocated expense and our actual expense are recognized in corporate unallocated expenses.
Pension and Retiree Medical Expense
Pension and retiree medical service costs measured at fixed discount rates are reflected in segment results. The variance between the fixed discount rate used to determine the service cost reflected in segment results and the discount rate as disclosed in Note 7 is reflected in corporate unallocated expenses.
Derivatives
We centrally manage commodity derivatives on behalf of our segments. These commodity derivatives include agricultural products, energy and metals. Commodity derivatives that do not qualify for hedge accounting treatment are marked to market each period with the resulting gains and losses recorded in corporate unallocated expenses as either cost of sales or selling, general and administrative expenses, depending on the underlying commodity. These gains and losses are subsequently reflected in segment results when the segments recognize the cost of the underlying commodity in operating profit. Therefore, the segments realize the economic effects of the derivative without experiencing any resulting mark-to-market volatility, which remains in corporate unallocated expenses. These derivatives hedge underlying commodity price risk and were not entered into for trading or speculative purposes.
Net Revenue, Significant Expenses and Operating Profit by Segment
Our chief operating decision maker (CODM) is our Chairman and Chief Executive Officer. Our CODM uses segment operating profit as the profit measure to evaluate segment performance and allocate resources across segments. Corporate unallocated expenses, other pension and retiree medical benefits (expense)/income and net interest expense and other are centrally managed costs and are therefore excluded from this profit measure to provide better transparency of our segment operating results. Our CODM considers variances of actual performance to our annual operating plan and periodic forecasts when making decisions.
Significant expenses are expenses which are regularly provided to the CODM and are included in segment operating profit. These consist of segment cost of sales, segment selling, general and administrative expenses, and various items affecting comparability. Segment cost of sales includes raw materials, direct labor and plant overhead, as well as purchasing and receiving costs, costs directly related to production planning, inspection costs and raw materials handling facilities, excluding the impact of items affecting comparability. Segment selling, general and administrative expenses include the costs to execute sales to customers, distribution costs, including the costs of shipping and handling activities, which include certain merchandising activities, costs related to brand and product marketing to consumers, other ongoing operating costs that are not directly related to manufacturing, distribution, selling, advertising or marketing activities as well as other income or expense items, excluding the impact of items affecting comparability. Items affecting comparability include restructuring and impairment charges, acquisition and divestiture-related charges, impairment and other charges/credits, indirect tax impact, product recall-related impact and pension and retiree medical-related impact.
Asset and other balance sheet information for segments is not provided to the CODM.
Net revenue, significant expenses and operating profit of each segment are as follows:
 2025
 PFNAPBNAIB FranchiseEMEALatAm FoodsAsia Pacific FoodsTotal
Net revenue$27,528 $28,197 $4,997 $18,025 $10,549 $4,629 $93,925 
Segment cost of sales (a)
10,564 12,910 1,529 10,437 4,480 2,850 
Segment selling, general and administrative expenses (a)
10,419 12,002 1,612 5,017 3,925 1,315 
Restructuring and impairment charges (b)
344 281 14 195 52 12 
Acquisition and divestiture-related charges (c)
28 422 — — — 3 
Impairment and other charges (d)
— 1,523 73 270 — 80 
Indirect tax impact (e)
— — — — 82 — 
Pension and retiree medical-related impact (f)
— (30)— — — — 
Segment operating profit$6,173 $1,089 $1,769 $2,106 $2,010 $369 $13,516 
Corporate unallocated expenses(2,018)
Operating profit11,498 
Other pension and retiree medical benefits expense(133)
Net interest expense and other(1,121)
Income before income taxes$10,244 
 2024
 PFNAPBNAIB FranchiseEMEALatAm FoodsAsia Pacific FoodsTotal
Net revenue$27,431 $27,769 $4,879 $16,658 $10,568 $4,549 $91,854 
Segment cost of sales (a)
10,245 12,701 1,482 9,639 4,420 2,756 
Segment selling, general and administrative expenses (a)(g)
10,204 11,964 1,689 4,787 4,047 1,402 
Restructuring and impairment charges (b)
161 238 24 116 49 9 
Acquisition and divestiture-related charges (c)
9 8 — — — 5 
Impairment and other charges (d)
9 556 4 145 — — 
Indirect tax impact (e)
— — 218 — — — 
Product recall-related impact (h)
184 — — — — — 
Segment operating profit$6,619 $2,302 $1,462 $1,971 $2,052 $377 $14,783 
Corporate unallocated expenses(1,896)
Operating profit12,887 
Other pension and retiree medical benefits expense(22)
Net interest expense and other(919)
Income before income taxes$11,946 
 2023
 PFNAPBNAIB FranchiseEMEALatAm FoodsAsia Pacific FoodsTotal
Net revenue$28,015 $27,626 $4,559 $16,210 $10,576 $4,485 $91,471 
Segment cost of sales (a)
10,432 12,856 1,478 9,666 4,591 2,711 
Segment selling, general and administrative expenses (a)
10,158 11,808 1,641 4,569 4,056 1,404 
Restructuring and impairment charges (b)
42 41 11 227 29 8 
Acquisition and divestiture-related charges (c)
— 16 — (2)— 2 
Impairment and other charges/credits (d)
— 321 862 (14)2 59 
Product recall-related impact (h)
136 — — — — — 
Segment operating profit$7,247 $2,584 $567 $1,764 $1,898 $301 $14,361 
Corporate unallocated expenses(2,375)
Operating profit11,986 
Other pension and retiree medical benefits income250 
Net interest expense and other(819)
Income before income taxes$11,417 
(a)Does not include items recorded in the cost of sales or selling, general and administrative expenses lines on our income statement that are presented in the restructuring and impairment charges, acquisition and divestiture-related charges, impairment and other charges/credits, indirect tax impact, product recall-related impact and pension and retiree medical-related impact lines of these tables.
(b)See Note 3 for further information related to restructuring and impairment charges.
(c)See Note 13 for further information related to acquisitions and divestiture-related charges.
(d)See below and Note 4 for impairment and other charges taken. In 2023, EMEA included adjustments for changes in estimates of previously recorded amounts.
(e)In 2025, we recorded a pre-tax charge of $82 million in selling, general and administrative expenses and income tax expense of $29 million in provision for income taxes (collectively, $0.08 per share) related to an indirect and income tax audit settlement in our LatAm Foods segment. In 2024, we recorded a pre-tax charge of $218 million ($218 million after-tax or $0.16 per share) in cost of sales related to an indirect tax reserve in our IB Franchise segment.
(f)We recognized pre-tax income of $30 million ($22 million after-tax or $0.02 per share) in our PBNA segment, recorded in selling, general and administrative expenses, associated with pension-related liabilities from previous acquisitions.
(g)We recognized a pre-tax gain of $122 million ($92 million after-tax or $0.07 per share) in our PFNA segment, recorded in selling, general and administrative expenses, related to the remeasurement of our previously held 50% equity ownership in Sabra at fair value. See Note 13 for further information.
(h)In 2024, we recorded a pre-tax charge of $187 million ($143 million after-tax or $0.10 per share) associated with the Quaker Recall with $176 million recorded in cost of sales related to property, plant and equipment write-offs, employee severance costs and other costs,
$8 million recorded in selling, general and administrative expenses and $3 million recorded in other pension and retiree medical benefits (expense)/income, which is not included in operating profit. In 2023, we recorded a pre-tax charge of $136 million ($104 million after-tax or $0.07 per share) in cost of sales for product returns, inventory write-offs and customer and consumer-related costs associated with the Quaker Recall.
Disaggregation of Net Revenue
Our primary performance obligation is the distribution and sales of beverage and convenient food products to our customers. The following table reflects the percentage of net revenue generated between our beverage business and our convenient food business:
202520242023
Beverages(a)
Convenient Foods
Beverages(a)
Convenient Foods
Beverages(a)
Convenient Foods
North America51 %49 %50 %50 %50 %50 %
International (b)
31 %69 %29 %71 %29 %71 %
PepsiCo42 %58 %42 %58 %41 %59 %
(a)Beverage revenue from company-owned bottlers, which primarily includes our consolidated bottling operations in our PBNA and EMEA segments, is 36% of our consolidated net revenue in 2025 and 35% of our consolidated net revenue in both 2024 and 2023. Generally, our finished goods beverage operations produce higher net revenue, but lower operating margins as compared to concentrate sold to authorized bottling partners for the manufacture of finished goods beverages.
(b)Beverage and convenient food revenue generated from our EMEA segment is 37% and 63% of EMEA net revenue, respectively, in 2025, and 35% and 65% of EMEA net revenue, respectively, in both 2024 and 2023.
Impairment and Other Charges
A summary of impairment and other charges taken, which are primarily as a result of our quantitative assessments, is as follows:
202520242023Affected Line Item in the Income Statement
PFNA
Other$— $9 $— Impairment of intangible assets
PBNA
Rockstar (a)
1,539 — — Impairment of intangible assets
TBG (b)
(16)556321Selling, general and administrative expenses
IB Franchise
Rockstar (a)
73 — — Impairment of intangible assets
SodaStream (a)
— — 862 Impairment of intangible assets
Other— 4 — Selling, general and administrative expenses
EMEA
Rockstar (a)
251 — — Impairment of intangible assets
TBG (b)
19 135 — Selling, general and administrative expenses
Other (c)
— 10 (14)Impairment of intangible assets, selling, general and administrative expenses and cost of sales
LatAm Foods
Other— — 2 Selling, general and administrative expenses
Asia Pacific Foods
Be & Cheery80 — 59 Impairment of intangible assets
Total$1,946 $714 $1,230 
After-tax amount (d)
$1,491 $584 $1,014 
Impact on net income attributable to PepsiCo per common share (d)
$(1.09)$(0.42)$(0.73)
(a)See Note 4 for further information regarding impairment of intangible assets. For information on our policies for indefinite-lived intangible assets, see Note 2.
(b)See Note 9 for further information regarding our proportionate share of TBG’s indefinite-lived intangible assets impairment and other-than-temporary impairment of our investment in TBG. In 2024, we recorded an allowance for expected credit losses of $193 million, primarily related to outstanding receivables associated with the Juice Transaction. In 2025, we recorded adjustments for changes in estimates of previously recorded amounts.
(c)2023 amount includes adjustments for changes in estimates of previously recorded amounts.
(d)2025 includes a tax benefit of $39 million ($0.03 per share) related to the prior-year impairment of our investment in TBG.
Other Segment Information
Capital spending and depreciation and amortization of each segment are as follows:
 Capital SpendingDepreciation and Amortization
 202520242023202520242023
PFNA$1,051 $1,306 $1,444 $969 $862 $798 
PBNA1,344 1,541 1,723 1,093 1,069 1,025 
IB Franchise124 148 110 109 109 99 
EMEA744 880 831 549 477 448 
LatAm Foods672 809 814 417 382 362 
Asia Pacific Foods257 312 312 153 133 118 
Total segment4,192 4,996 5,234 3,290 3,032 2,850 
Corporate223 322 284 161 128 98 
Total$4,415 $5,318 $5,518 $3,451 $3,160 $2,948 
Net revenue by country is as follows:    
 202520242023
United States$52,228 $51,668 $52,165 
Mexico6,947 7,123 7,011 
Russia4,768 3,880 3,566 
Canada3,729 3,764 3,722 
China2,621 2,709 2,703 
United Kingdom2,142 2,063 1,946 
Brazil1,782 1,765 1,779 
South Africa1,767 1,859 1,707 
All other countries17,941 17,023 16,872 
Total$93,925 $91,854 $91,471 
Property, plant and equipment, net by geography is as follows:    
20252024
United States$16,671 $16,550 
International (a)
13,234 11,458 
Total$29,905 $28,008 
(a)Mexico accounted for 9% and 8% of our consolidated property, plant and equipment, net as of December 27, 2025 and December 28, 2024, respectively. No other individual country exceeded 5% of our consolidated property, plant and equipment, net.
Corporate Unallocated Expenses
Corporate unallocated expenses include costs of our corporate headquarters, centrally managed initiatives such as our ongoing business transformation initiatives, unallocated research and development costs, foreign exchange transaction gains and losses, unallocated insurance and benefit programs, commodity derivative gains and losses, as well as certain other items.