This December, the U.S. Food and Drug Administration (FDA) issued a recall of more than 40 Quaker Oats products due to possible salmonella contamination. Then, in January, dozens of additional Quaker Oats products were tacked onto the original notice—including Cap’n Crunch bars and Quaker Cereal. And now, PepsiCo’s first-quarter earnings and revenue report shows that the major recalls put a dent in U.S. sales.
Based on the report, released this morning, PepsiCo came out on top of Wall Street analysts’ expectations in terms of profit and revenue, with net revenue rising 2.3% to $18.25 billion compared to last quarter. The increase was largely driven by demand for PepsiCo soda and snacks in international markets, including Europe, China, and Australia.
But the company’s overall volume was down alongside demand in the United States—two issues that were only made worse by the Quaker Oats recalls.
The North American Quaker Food division reported a 22% volume slump this quarter, which impacted PepsiCo’s organic volume by 1%. Products involved in the recalls were sold across the 50 United States, as well as Guam, Puerto Rico, and Saipan. The Quaker Oats plant associated with the recalls was temporarily closed earlier this year, and PepsiCo announced that it would be fully shut down in June.
PepsiCo’s lackluster demand in the U.S. is also thanks, in part, to the impact of inflation on lower-income consumers.
“We’ve had three years of . . . massive consumer inflation and that has to be absorbed, and I think the cumulative impact of that put a bit of strain on the consumer,” PepsiCo CFO Jamie Caulfield said in an interview with Reuters. “But we expect that to abate as time goes on.”