Risk factor changes · PEP

What changed in PepsiCo's risk factors

Item 1A (Risk Factors) of PepsiCo's FY2025 10-K compared with its FY2024 10-K, sentence by sentence.

Newer: 10-K filed 2026-02-03 · Older: 10-K filed 2025-02-04

New in the latest 10-K 14

• Damage to our reputation or brand image can adversely affect our business.
• These risks could be heightened in light of new or evolving regulations, changes to our portfolio (including increased use of functional or other ingredients), aging infrastructure, and increased pressure on our suppliers from supply chain disruptions.
• Any inability to compete effectively can adversely affect our business.
• Changing dynamics at the retail level have also impacted and may continue to impact our ability to grow in certain jurisdictions.
• These changing conditions may also adversely impact how our customers compete in the markets in which they operate, which may in turn affect purchasing patterns of our products.
• In addition, the imposition of tariffs (including U.S. tariffs imposed or threatened to be imposed on China, the European Union, Canada and Mexico and other countries and any tariffs imposed by such countries) have impacted and could continue to impact our supply chain resulting in increased input costs, including the cost of certain raw materials and packaging.
• The impact of tariffs will continue to vary, including based on where inputs are sourced from and shipped to.
• Strikes or work stoppages can cause our business to suffer.
• Fluctuations in exchange rates impact our financial performance.
• For example, Mexico recently enacted an increase to its existing flat tax on all sweetened beverages, effective January 1, 2026, from a rate of approximately $0.09 (1.64 Mexican pesos) to a rate of approximately $0.17 (3.08 Mexican pesos) per liter.
• For example, in 2025, the state of Texas passed a law, effective January 1, 2027, requiring warning labels on products containing certain ingredients, including artificial colors.
• For example, multiple states in the United States have implemented, or are considering implementing, extended producer responsibility laws that will increase expenses, including through fees paid to state governments in connection with such laws.
• The increasing adoption of artificial intelligence technologies has led data protection authorities in many jurisdictions in which we operate to consider and adopt new and evolving interpretations of privacy and data protection laws, with specific obligations regarding processing of personal data, including required notices, consents, and opt-outs.
• For example, as a global food and beverage company, we are subject to increased regulatory scrutiny and face legal challenges in a variety of jurisdictions concerning alleged health implications associated with consumption of certain of our food products, our development or marketing of those products and/or the alleged environmental impact of the packaging used for certain of our products.

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Removed words are struck through; added words are highlighted.

• Consumer preferences continuously evolve due to a variety of factors, including: changes in consumer demographics, consumption patterns, patterns (including increased food purchased away-from-home), diet (whether due to changes in consumer behavior and eating habits, increasing use of weight-loss drugs drugs, such as GLP-1 medications, or other factors) and channel preferences (including continued increases in the e-commerce and online-to-offline channels); channels and use of artificial intelligence shopping agents that autonomously select products that may not be ours); pricing (including the effective impact of tariffs and taxes imposed on the manufacture, distribution or sale of certain of our products as a result of ingredients contained in such products); affordability pressures and changes in consumer spending patterns (including if consumers switch to private label or lower-priced product offerings); changes in funding for or restrictions on the inclusion of our products in benefit programs, such as the Supplemental Nutrition Assistance Program (SNAP) in the United States; product quality; product functionality (including products high in protein or fiber-enriched); concerns or perceptions regarding packaging and its environmental impact (such as single-use and other plastic packaging); concerns or perceptions regarding the processing, nutrition profile and health effects of, or location of origin of, ingredients or substances in our products or packaging, including due to public statements by government officials, increased litigation, changes in regulations, regulatory scrutiny or the results of third-party studies (whether or not scientifically valid); and concerns or perceptions regarding our workforce policies and initiatives.
• Concerns with any of the foregoing could have affected and may continue to affect consumer behaviors and can lead consumers to reduce or publicly boycott the purchase or consumption of our products.
• Pandemics, epidemics or other disease outbreaks and geopolitical events and tensions, wars and other military conflicts, including the ongoing conflicts in Ukraine and the Middle East, have also impacted and could continue to impact consumer preferences and demand for our products, including negative consumer sentiment toward non-local products.
• In addition, our business operations, including our supply chain, are subject to disruption by geopolitical events and tensions, wars and other military conflicts, natural disasters, pandemics, epidemics or other events beyond 11 Table of Contents our control that could negatively impact product availability and decrease demand for our products if our crisis management plans do not effectively mitigate these issues. 12 Table of Contents Damage to our reputation or brand image can adversely affect our business.
• Maintaining a positive reputation globally is critical important to selling our products. business.
• Our reputation or brand image has in the past been, and could in the future be, adversely impacted by a variety of factors, including: any failure by us, our business partners, or other actors in our supply chain to maintain high ethical, business and environmental, social and governance practices, including with respect to human rights, child labor, workforce policies and initiatives, workplace conditions and employee health and safety; any failure, or perception of a perceived failure, to achieve or make sufficient progress toward our environmental, social and governance goals, or any revisions of or negative perception toward such goals, including with respect to the nutrition profile of our products, packaging, water use, our impact on the environment and our workforce policies and initiatives; any difficulties executing our strategic initiatives; any failure to address health or other concerns about our products, products we distribute, certain brands licensed to and distributed to third parties (including alcoholic beverages), or particular ingredients or substances in our products, including concerns or perceptions regarding whether certain of our products are ultra-processed ultra-processed, contain certain ingredients or substances or otherwise contribute to obesity and other health conditions or an increase in public health costs; our research and development efforts; any product quality or safety issues, including the recall of any of our products; any failure to comply with laws and regulations; consumer perception of our advertising campaigns, sponsorship arrangements, marketing programs, use of social media and our response to political and social issues, geopolitical events and tensions, wars and other military conflicts, including the ongoing conflicts in Ukraine and the Middle East, or catastrophic events; or any failure to effectively respond to negative or inaccurate comments about us on social media or otherwise regarding any of the foregoing.
• Product quality or safety issues identified by us or governmental authorities have in the past and could in the future also reduce consumer confidence and demand for our products, cause production and delivery disruptions, including as a result of temporary or permanent closure of manufacturing plants or facilities, and result in increased costs (including payment of fines and/or judgments, cleaning and remediation costs and legal fees, and costs associated with alternative sources of production) and damage our reputation (or the reputation of joint ventures in which we have an interest), particularly as we or our joint ventures continue to expand into new categories, all of which can adversely affect our business.
• Any perception or allegation (whether or not valid) of failure to maintain adequate oversight over product quality or safety can result in product recalls, litigation, government investigations, inspections or inquiries or civil or criminal proceedings, all of which may result in fines, penalties, damages or damages, criminal liability. liability, damage to our reputation or changes in consumer demand.
• Our business can also be adversely affected if consumers lose confidence in product 12 Table of Contents quality, safety and integrity generally, even if such loss of confidence is unrelated to products in our portfolio.
• In addition, while we currently maintain insurance coverage that, subject to its terms and conditions, is intended to address costs associated with certain aspects of product recalls, this insurance coverage may not, depending on the specific facts and circumstances surrounding an incident, cover all losses or all types of claims that arise from an incident, or the damage to our reputation or brands that may result from an incident. 13 Table of Contents Any inability to compete effectively can adversely affect our business.
• Our business can be adversely affected if our strategy is not effective, if we fail to achieve the commercial and financial priorities announced during 2025 to improve our marketplace competitiveness and financial performance, including in our North American businesses, if we are unable to effectively promote or develop our existing products or introduce and effectively market new products, products (including in response to increased consumer demand for products with certain attributes, functional benefits, ingredients or nutrition profiles), if we are unable to effectively digitalize our operations and adopt new technologies, including artificial intelligence and data analytics to develop new commercial insights and improve operating efficiencies, if we are unable to continuously strengthen and evolve our capabilities in digital marketing, if our competitors spend more aggressively or effectively than we do, if our competitors are more successful than us in shifting to products that are less effected affected by the impact of taxes imposed as a result of ingredients contained in such products, or if we are otherwise unable to effectively respond to supply disruptions, pricing pressure (including as a result of commodity inflation) or otherwise compete effectively, and we may be unable to grow or maintain sales or category share or we may need to increase capital, marketing or other expenditures.
• Any of the foregoing can adversely affect our business. 13 Table of Contents Water scarcity can adversely affect our business.
• Lack of available water of acceptable quality, actions by governmental and non-governmental organizations, investors, customers and consumers on water scarcity and increasing pressure to conserve and replenish water in areas of scarcity and stress, including due to the effects of climate change, can lead to: supply chain disruption; adverse effects on our operations or the operations of our business partners; higher compliance costs; increased capital expenditures (including investments in the development of technologies to enhance water efficiency and reduce consumption); higher production costs, including less favorable pricing for water; the interruption or cessation of operations at, or relocation of, our facilities or the facilities of our business partners; failure to achieve our goals relating to water use; perception of our failure to act responsibly with 14 Table of Contents respect to water use or to effectively respond to legal or regulatory requirements concerning water scarcity; or damage to our reputation, any of which can adversely affect our business.
• In addition, our business can be adversely affected if we are unable to profitably expand our own direct-to-consumer e-commerce capabilities.
• In this changing retail landscape, retailers and buying groups have impacted and may continue to impact our ability to compete in these jurisdictions by demanding lower prices or increased promotional programs, are shifting traditional value propositions, removing our products or otherwise reducing shelf space allocated to our products and focusing on introducing and developing private-label brands.
• Our inability to resolve a significant dispute with any of our key customers, a A change in the business condition conditions (financial or otherwise) of any of our key customers, even if unrelated to us, a significant reduction in sales to any key customer, or the loss of any of our key customers has adversely affected and c an continue to adversely affect our business.
• Many of the raw materials and supplies used in the production of our products are sourced from countries experiencing war and or other military conflict, acts of terrorism, civil unrest, political instability or unfavorable economic conditions.
• There can be no assurance that we will be able to maintain favorable arrangements and relationships with suppliers or that our contingency plans will be effective to mitigate disruptions that may arise from shortages or discontinuation of any raw materials and other supplies that we use in the manufacture, production and distribution of our products or from operational or financial 14 Table of Contents instability of our key suppliers.
• The raw materials and other supplies, including agricultural commodities, fuel and packaging materials, such as recycled PET, transportation, labor and other supply chain inputs that we use for the manufacturing, production and distribution of our products are subject to price volatility and fluctuations in availability caused by many factors, including changes in supply and demand, supplier capacity constraints, inflation, weather conditions (including potential effects of climate change), fire, natural 15 Table of Contents disasters, disease or pests (including the impact of greening disease on the citrus industry), agricultural uncertainty, health epidemics or pandemics or other contagious outbreaks, labor shortages or changes in availability of our or our business partners workforce, strikes or work stoppages (including by railway workers or other third parties involved in the manufacture, production and distribution of our products), governmental incentives and controls and import/export restrictions, such as new, expanded or retaliatory tariffs, sanctions, quotas or trade barriers (including recent U.S. tariffs imposed or threatened to be imposed on China, Canada and Mexico and other countries and any retaliatory actions taken by such countries), barriers, port congestions or delays, transport capacity constraints, cybersecurity incidents or other disruptions, loss or impairment of key manufacturing sites, political uncertainties, geopolitical events and tensions, wars and other military conflicts (including the ongoing conflicts in Ukraine and the Middle East), conflicts, acts of terrorism, governmental instability or currency exchange rates.
• Even as certain inflationary pressures moderated, we We continued to experience volatility in our commodity, packaging and transportation costs during 2024, 2025, which may continue.
• Political, The impact from political, social and geopolitical conditions in the markets in which our products are sold have has been and could continue to be difficult to predict, resulting in adverse effects on our business.
• The results of elections, referendums or other political conditions (including government shutdowns), geopolitical events and tensions, wars and other military conflicts (such as the ongoing conflicts conflict in Ukraine and the Middle East) recent intervention in Venezuela) in these markets have in the past impacted and could continue to impact how existing laws, regulations and government programs or policies are implemented or result in uncertainty as to how such laws, regulations, programs or policies may change, including with respect to the negotiation of new trade agreements, new, expanded or retaliatory tariffs against certain countries or covering certain products or ingredients (including recent U.S. tariffs imposed or threatened to be imposed on China, the European Union, Canada and Mexico and other countries and any retaliatory actions taken by such countries), sanctions, environmental and climate change regulations, taxes, benefit programs, programs (including any changes to governmental subsidies provided to our consumers such as SNAP in the United States), the movement of goods, services and people between countries, relationships between countries, customer or consumer perception of a particular country or its government and other matters.
• In addition, geopolitical conflicts (such as the ongoing conflict in Ukraine) could result in temporary or permanent loss of assets, including the nationalization or expropriation of assets. 15 Table of Contents In addition, political and social conditions in certain jurisdictions have resulted in demonstrations and protests, including in connection with geopolitical events and tensions, political elections, civil rights and liberties.
• Our business in these markets has been and could continue in the 16 Table of Contents future to be impacted by economic, political and social conditions; geopolitical conflicts or tensions, acts of war, terrorist acts, and civil unrest, including demonstrations and protests; competition; tariffs, sanctions or other regulations restricting contact with certain countries in these markets; foreign ownership restrictions; nationalization of our assets or the assets of our business partners; government-mandated closure, or threatened closure, of our operations or the operations of our business partners; restrictions on the import or export of our products or ingredients or substances used in our products; highly inflationary economies; devaluation or fluctuation or demonetization of currency; regulations on the transfer of funds to and from foreign countries, currency controls or other currency exchange restrictions, which result in significant cash balances in foreign countries, from time to time, or can significantly affect our ability to effectively manage our operations in certain of these markets and can result in the deconsolidation of such businesses; the lack of well-established or reliable legal systems; increased costs of doing business due to compliance with complex foreign and U.S. laws and regulations that apply to our international operations, including the Foreign Corrupt Practices Act, the U.K.
• Many of the jurisdictions in which our products are sold have experienced and could continue to experience uncertain or unfavorable economic conditions, such as high inflation and adverse changes in interest rates, tax laws or tax rates, rates and new, expanded or retaliatory tariffs, including as a result of geopolitical events and tensions.
• In addition, we cannot predict how current or future economic conditions will affect our business partners, including financial institutions with whom we do business, and any negative impact on any of the foregoing may also have an adverse impact on our business. 16 Table of Contents Future cyber incidents and other disruptions to our information systems can adversely affect our business.
• Our business has in the past and could in the future be negatively affected by system shutdowns, degraded systems performance, security incidents, systems disruptions or security incidents. shutdowns or degraded systems performance.
• These disruptions or incidents or disruptions may be caused by cyberattacks and other cyber incidents, network or power outages, software, equipment or telecommunications failures, the unintentional or malicious actions of employees or contractors, natural disasters, fires or other catastrophic events.
• Cyberattacks and other cyber incidents are occurring more frequently, and the techniques used to gain access to information technology systems and data, disable or degrade service or sabotage systems are constantly evolving and becoming more sophisticated in nature and are being carried out by groups and individuals with a wide range of expertise and motives.
• For example, malicious actors have employed and 17 Table of Contents could continue to employ the information technology supply chain to introduce malware through software updates or compromised supplier accounts or hardware and exploit known or unknown hardware or software vulnerabilities in our systems or the systems of our vendors and third-party service providers.
• While we believe we devote significant resources to network security, disaster recovery, 18 Table of Contents employee training and other measures to secure our information technology systems and prevent unauthorized access to or loss of data, there are no guarantees that they will be adequate to safeguard against all cyber incidents, systems disruptions, system compromises or misuses of data.
• The success of these transactions, including our recent acquisition of Garza Food Ventures LLC (Siete), transactions is dependent upon, among other things, our ability to realize the full extent of the expected returns, benefits, cost savings or synergies as a result of a transaction, within the anticipated time frame, or at all; and receipt of necessary consents, clearances and approvals.
• In addition, failure to successfully complete or manage strategic transactions may impede our efforts to shift our portfolio to include new products that are less affected by the impact of ingredient-based taxes or other regulatory actions. actions or scrutiny. 18 Table of Contents Our reliance on third-party service providers and enterprise-wide systems can have an adverse effect on our business.
• Depending on the function involved, such errors can also lead to business disruption, systems performance degradation, processing inefficiencies or other systems disruptions, the loss of or damage to intellectual property or sensitive data through security breaches or otherwise, incorrect or adverse effects on financial reporting, litigation, claims, legal or regulatory proceedings, inquiries or investigations, fines or penalties, 19 Table of Contents remediation costs, damage to our reputation or have a negative impact on employee morale, all of which can adversely affect our business.
• In addition, we continue on our multi-year phased business transformation initiative to migrate certain aspects of our systems, including our financial processing systems, to enterprise-wide systems solutions and have deployed these systems in certain countries and divisions. segments.
• Also, there is an increased continued focus in many jurisdictions in which our products are made, manufactured, distributed or sold regarding environmental policies relating to climate change, biodiversity loss, deforestation, regulating greenhouse gas emissions, energy policies and sustainability, including single-use plastics.
• In addition, there can be no assurance that we will achieve our sustainability goal, goals, which will require significant effort and resources from us and other stakeholders, such as our suppliers and other third parties, governmental entities, and the development of technology that may not currently exist or exist at scale.
• Further, developing and collecting, measuring and reporting sustainability information and metrics can be costly, difficult and time consuming and is subject to changing interpretive guidance and evolving reporting standards, including the European Sustainability Reporting Standards and Corporate Sustainability Reporting Directive in the European Union, especially to the extent these standards are not harmonized or consistent.
• Further, methodologies for reporting our data may be updated and previously 19 Table of Contents reported data may be adjusted to reflect improvement in availability and quality of third-party data, changing assumptions, changes in the nature and scope of our operations (including from acquisitions and divestitures) and other changes in circumstances.
• Lack of progress or failure to properly report on our goals with respect to reducing our impact on the environment or perception of a failure to act responsibly with respect to the environment or to effectively respond to regulatory requirements concerning climate change and other sustainability matters, including the use of single-use plastics, has led and could continue to lead to adverse publicity, which could result in reduced demand for our products, damage to our reputation and reputation, an increased the risk of litigation, regulatory proceedings, inquiries or investigations, which has have adversely affected our business.

Removed since the previous 10-K 12

• Water scarcity can adversely affect our business.
• The retail industry is also impacted by the actions and increasing power of retailers, including as a result of increased consolidation of ownership resulting in large retailers or buying groups with increased purchasing power, particularly in North America, Europe and Latin America.
• The increasing power of retailers and consolidation may also adversely impact our other customers ability to compete effectively in the market in which they operate, which may in turn affect orders of our products.
• In addition, political and social conditions in certain jurisdictions have resulted in demonstrations and protests, including in connection with geopolitical events and tensions, political elections, civil rights and liberties.
• Future cyber incidents and other disruptions to our information systems can adversely affect our business.
• In addition, the increase in certain of our employees working remotely has resulted in increased demand on our information technology infrastructure, which can be 17 Table of Contents subject to failure, disruption or unavailability, and increased vulnerability to cyberattacks and other cyber incidents.
• Our reliance on third-party service providers and enterprise-wide systems can have an adverse effect on our business.
• For example, Italy enacted a flat tax on all non-alcoholic beverages, effective July 1, 2025, at a rate of 0.10 Euro (0.11 U.S. dollars) per liter for drinks with a sweetener content higher than 25g per liter.
• For example, in 2023 the U.K. restricted promotion and in-store placement of high in fat, sugar or salt products and in 2024, the state of California enacted a regulation banning artificial colors in products sold in K-12 public schools effective in 2027.
• For example, the European Union, Peru, South Africa and certain states in the United States, among other jurisdictions, have imposed a minimum recycled content requirement for beverage bottle packaging and similar legislation is under consideration in other jurisdictions.
• For example, numerous countries have agreed to a statement in support of the Organization for Economic Co-operation and Development model (OECD) rules that propose a partial global profit reallocation and a global minimum tax rate of 15%.
• Potential liabilities and costs from litigation, claims, legal or regulatory proceedings, inquiries or investigations can have an adverse impact on our business.

Source: SEC EDGAR filings, compared sentence by sentence by EdgarStack. Sentence matching is automated and may pair or split passages imperfectly; check the linked filings before relying on any passage. A software tool, not financial advice. Not affiliated with the U.S. Securities and Exchange Commission.