Growth is a mirage when the boxes are staying on the shelf.
Anne Tse, CEO of PepsiCo Asia Pacific, arrives at the Fortune Innovation Forum in Kuala Lumpur next week with a difficult narrative to sell. While the corporate script emphasizes ‘innovation’ and ‘digital transformation,’ the cold fiscal data from the October 9 SEC filing tells a story of exhaustion. PepsiCo (PEP) closed yesterday, November 10, 2025, at $142.62, a figure that reflects a market grappling with a fundamental paradox: revenue is up, but people are buying less product. The third-quarter results showed a 1 percent decline in global volumes for both food and beverages. In the consumer goods world, volume is the only true measure of brand health. Everything else is just math and price hikes.
The pricing power ceiling has been reached.
For two years, PepsiCo has leaned on ‘price-pack architecture’ to mask stagnant demand. By shrinking bag sizes and raising prices, they maintained the illusion of growth. But the Q3 numbers suggest the consumer has finally snapped. North American food volumes dropped 3 percent, a massive red flag for the Frito-Lay segment that usually acts as the company’s profit engine. In Kuala Lumpur, Tse will likely point to the Asia Pacific region as the new frontier, but even there, the ‘innovation’ being touted is increasingly defensive. The pivot toward ‘functional health’ and the ‘silver economy’ in China is not just a strategic choice. It is a necessary retreat from the high-sugar, high-sodium core products that are losing favor with an aging, health-conscious demographic.
Volatility in the Kuala Lumpur backdrop.
Choosing Malaysia for the Fortune Innovation Forum is a calculated move. Southeast Asia is currently the battleground for what remains of PepsiCo’s emerging market growth. However, the macro-environment is working against them. The company already flagged a 0.5 percent foreign exchange headwind in its latest report, and with the US Dollar showing continued strength against the Malaysian Ringgit and the Chinese Yuan, those APAC margins are under extreme pressure. Tse has been vocal about China being an ‘innovation engine,’ but the cost of building that engine is high. The new $180 million food production base in Xi’an, which began trial operations in September 2025, represents a massive capital expenditure at a time when core EPS is already struggling to remain even with the prior year.
The Volume vs. Revenue Gap (Q3 2025)
Source: PepsiCo Q3 2025 Earnings Report. Note the negative correlation between price-driven revenue and physical unit movement.
The ‘Innovation’ label is being used to hide restructuring.
When leadership talks about ‘accelerating portfolio transformation,’ they are often talking about getting rid of underperforming legacy assets. In the latest industry briefings, analysts have noted that PepsiCo’s North American food business revenue decreased by 3 percent largely due to divestitures and a ‘subdued consumer backdrop.’ In the APAC region, the challenge is different but equally daunting. Anne Tse is tasked with maintaining the prestige of brands like Lay’s and Pepsi while local, more agile competitors undercut them on price and localized flavors. The ‘digital transformation’ mentioned in the forum agenda is less about the consumer experience and more about supply chain survival. They are using AI and predictive analytics to figure out exactly how much they can raise prices before a customer walks away entirely.
Commodity costs and the hidden tax on snacks.
The cost of goods sold is not coming down as fast as the marketing department would like. Potato and corn prices have remained stubbornly high throughout 2025, and the energy costs associated with global distribution are eating into the productivity savings PepsiCo promised earlier this year. The company is currently returning $8.6 billion to shareholders via dividends and buybacks, but questions are rising about whether that capital would be better spent defending market share. If the ‘innovation’ coming out of the APAC region doesn’t translate into actual volume growth by the end of the year, the dividend growth streak, currently at 53 years, will become a heavy chain around the company’s neck.
Watch the January 2026 organic volume metrics.
The real test of Anne Tse’s leadership and the effectiveness of the Kuala Lumpur strategies will not be found in a keynote speech. It will be found in the first batch of data released in early 2026. Investors should look past the headline revenue figures and focus strictly on the Organic Volume Performance for the Asia Pacific segment. If that number remains in negative territory despite the ‘innovation’ push, it will signal that PepsiCo’s brands are losing their grip on the emerging middle class. The next major milestone for the stock will be the January 2026 volume report, where any figure below a 0.5 percent increase will likely trigger a re-evaluation of the company’s current valuation premium.
