Can Pepsi’s CEO Turn It Around? & Delta Flies High

Summary

Brew Markets Daily – Episode Summary

Episode Title: Can Pepsi’s CEO Turn It Around? & Delta Flies High
Date: October 9, 2025
Host: Ann Berry

---

Episode Overview

In this episode, Ann Berry dives into two major stories: PepsiCo’s struggle to reignite growth under CEO Ramon Laguarta and Delta’s optimistic earnings report suggesting a rebound in corporate and premium travel. The show also demystifies the concept of dividend recapitalizations in private equity, answers a listener question, and covers the latest stock market headlines—including developments at Ferrari and Costco—as well as moves by Netflix and Instagram in the streaming wars.

---

Key Discussion Points & Insights

1. PepsiCo: Can the CEO Turn It Around?

[00:26–04:34]

• Context: PepsiCo’s share price dropped ~20% in the last 12 months and remains flat over five years. The company’s core Frito Lay snacks unit is suffering as consumer preferences shift to healthier brands, and Coke is gaining share in beverages—its stock is up 30% since 2020.
• CEO’s Strategy: Ramon Laguarta highlights “being brilliant at the basics” and points to:
  • Modest acceleration in North American beverages
  • Portfolio diversification (e.g., Sabra hummus, Poppy probiotic drink, Celsius energy drinks)
  • Cost cutting and supply chain streamlining
  • 2026 targeted as the year for a turnaround
• Notable Quote:
  • Ramon Laguarta: “The first one is being brilliant at the basics, and that is something that we're focusing on… the right price points, the right service levels, the right execution, the right service to our customers, the right customer plans.” ([02:22])
• Activist Pressure: Elliott Management acquired a $4B stake, presented a 74-page list of ideas—including franchising bottling (like Coke), selling Quaker Oats, and drinks portfolio streamlining for better margins.
• Ann’s Take:
  • Ann Berry: “Elliot is not holding out till 2030 for a turnaround... my guess is the CEO is now on borrowed time. He's had seven years. Now he needs to sprint because the activist clock is ticking.” ([04:30])

---

2. Delta Flies High: Airline Earnings & Industry Bellwether

[04:46–12:33]

• Delta’s Strong Quarter:
  • $15B in revenue (up 4% YOY), EPS of $1.71 (beat by ~$0.20), improved full-year guidance
  • Stock up as much as 6.5% on the day ([05:18])
• Growth Drivers: CEO Ed Bastian cites “premium, corporate, and loyalty” as growth engines.
  • Premium and first-class revenue up 9%
  • Corporate/business travel up 8%
  • Survey: 90% of companies expect equal or increased travel in 2026
• Industry Indicator?
  • Delta’s guidance fluctuations tied to tariff uncertainty illustrate airlines as bellwethers for corporate sentiment
  • Surge in “revenge travel” since COVID, but business travel lagged until now
  • Other airlines rising in tandem: Delta up 76% since April, United up 97% ([08:50])
• Customer Loyalty Innovations:
  • YouTube on flights, Uber/Delta SkyMile linkage, fast/free Wi-Fi
  • Ann Berry: “Launching YouTube as part of the in flight entertainment experience is absolutely nothing for me... but as soon as that free WI fi runs out, it's incredibly expensive to get back online. So I actually like the free WI fi feature. That's probably the most important to me.” ([09:45])
• Loyalty Revenue Importance:
  • Delta earned ~$7B from Amex partnership in 2023, American Airlines $5.2B from co-branded cards ([11:00])
  • “These loyalty programs actually generate billions of dollars in revenue for these airlines every single year.” – Ann Berry ([11:43])
• Warning Sign:
  • Government shutdown impacting air traffic control—not covered much in earnings yet, but recognized as a major operational risk.
  • Flat comment from CEO Ed Bastian: “We’re hopeful that Congress will act to reopen the government as soon as possible.” ([12:26])

---

3. Explainer: What is a Dividend Recap?

[13:56–16:59]

• Listener Question: “Why would a company issue more debt just to offer dividends?” – Gabriel in Chicago.
• Ann's Explanation:
  • Draws analogies to refinancing a home.
  • Private equity may increase a portfolio company’s debt (when conditions allow) to pay a dividend to themselves, instead of waiting for a sale.
  • Useful when company performance improves or rates drop.
• Key Points:
  • Critics: This can load firms with excess debt.
  • Supporters: It’s a reward for taking risk and part of financial toolkit.
  • Relevance: Lower interest rates = more dividend recap opportunities on the horizon.

---

4. Market Wrap & Headlines

[17:07–17:50]

• Major Indices Down:
  • S&P 500: -0.25%
  • NASDAQ: -0.10%
  • Dow Jones: -0.50%
• Headlines:
  • Ferrari shares fall 16% after a cautious long-term forecast and muted EV enthusiasm
  • Costco up 2.25%, September sales up 8% with strong membership increases

---

5. Streaming & Social Media Wars

[17:50–19:08]

• Netflix Moves: Nearing deal with Warner Music Group for movies and documentaries based on label’s artists.
• Meta/Instagram: Reportedly working on a TV app to rival YouTube.
• Ann’s Take:
  • “These two things, the streamers and social media and then TV all starting to converge on each other... we're going to keep watching this one.” ([19:00])

---

Notable Quotes & Memorable Moments

• PepsiCo:

  • Ramon Laguarta on basics: “We feel very good about how our customer plans are starting to shape up now.” ([02:22])
  • Ann Berry on CEO’s urgency: “Now he needs to sprint because the activist clock is ticking.” ([04:34])

• Delta:

  • Ed Bastian (CEO): “Revenue grew 4% led by premium corporate and loyalty.” ([05:51])
  • Ann Berry on loyalty: “These loyalty programs actually generate billions of dollars in revenue for these airlines...” ([11:43])

• Listener Q&A:

  • Ann Berry explaining dividend recaps:
    “It’s not dissimilar to owning a home... that enables you to both keep your house and get some cash out to use for something else.” ([14:12])

• Streaming Wars:

  • Ann Berry: “Streamers and social media and then TV all starting to converge on each other…” ([19:00])

---

Timestamps for Key Segments

• PepsiCo’s turnaround challenge: [00:26–04:34]
• Delta’s earnings & airline industry insights: [04:46–12:33]
• Dividend recap explainer: [13:56–16:59]
• Market wrap and stock headlines: [17:07–17:50]
• Streaming wars & media convergence: [17:50–19:08]

---

Summary Takeaways

This episode unpacks pressing questions facing two iconic brands in America—whether Pepsi’s CEO can outpace activist impatience and what Delta’s success says about the broader economy. Listeners gain clarity on private equity’s much-discussed but little-understood dividend recaps. The show closes with a look at disruptive moves in streaming and social media, highlighting the blurring lines across the attention economy. Ann Berry’s insights deliver both financial clarity and cultural context in signature Brew Markets style.

Transcript

[A]

When did making plans get this complicated? It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together. Use polls to settle dinner plans, send event invites and pin messages so no.

[B]

One forgets mom 60th and never miss a meme or milestone.

[A]

All protected with end to end encryption. It's time for WhatsApp message privately with everyone.

[B]

Learn more at WhatsApp.com Delta stock soars after earnings, but will other airlines feel the lift? One listener asks us what is a dividend recap? We bust through the jargon and explain why this matters right now and PepsiCo CEO pushes for change, but is it fast enough for the activist circling? We break it down for Thursday, October 9th is Blue Markets Daily and I'm Ann Berry. More market details to come. But first, just what does it take to get a CEO to put on their sprinting shoes and get a company's growth back on track? While PepsiCo offers one evolving case study, the food and beverage giant has seen its share price drop about 20% over the past 12 months, and its stock is essentially flat over the past five years. Now, PepsiCo has had challenges across the board, especially in its Frito Lay snacks division, where 90% volumes are in salty products, which consumers have been pulling back from in favor of healthier brands. Meanwhile, arch rival Coca Cola has been gaining share in the drinks category at Pepsi's expense. Coke stock price, in contrast, is up 30% since 2020. Now PepsiCo CEO Ramon Laguata has been making recent moves to reignite growth, and in this morning's earnings, he focused on positive trends emerging from those efforts, including a modest acceleration in revenue growth in North American beverages and shifting Pepsi's overall portfolio towards more exciting categories with investments in hummus brand Sabra, Probiotic drink, Poppy and energy drink brand Celsius. Now, along with cost cutting efforts and streamlining the supply chain, Laguata believes that 2026 is the year that all these efforts will come to fruition. Let's hear what he had to say about why.

[A]

Clearly, I'll tell you about the why. We see that happening during the year. The first one is being brilliant at the basics, and that is something that we're focusing on. As I said earlier, the right price points, the right service levels, the right execution, the right service to our customers, the right customer plans. And we feel very good about how our customer plans are starting to shape up now.

[B]

While Pepsi stock popped up over 3% on today's earnings release, the comments that we just heard are critical to Understand why Pepsi still has a problem. Now, the CEO has been in that seat for seven years. Results have been sluggish for half that time. Which begs the question, why haven't the quote basics been brilliant before now? And even today's report noted declining sales volumes in Pepsi's two biggest businesses. Well, last month, activist investor Elliott management unveiled a $4 billion stake in PepsiCo and sent a 74 page presentation to the company's board listing ways to unlock more value. I went through that 74 page presentation. It's a pretty good read and it has a lot of ideas in it. Now, Elliot suggestions include franchising out Pepsi's bottling business, something Coke has already done, as well as selling the Quaker Oats brand and streamlining the drinks portfolio. The activist is focused on reinvestment to then get margins back up. They've been steadily declining. Well, Iguata today said that he had a quote couple of interactions with Elliott Management that he described as collaborative. Though he said that Elliott's ideas were already part of PepsiCo's five year strategy. Now here's my view, just one person's perspective. Elliot is not holding out till 2030 for a turnaround. They do not have a five year perspective. And while PepsiCo announced also today that it's replacing its CFO, my guess is the CEO is now on borrowed time. He's had seven years. Now he needs to sprint because the activist clock is is ticking. Coming up, what's going on in the skies. We take a look at the latest. With the airlines and interest rates coming down may mean more dividend recaps. So what are they? But first, a word from our sponsor, capital client group. Now, our producer John and I were talking about some other podcasts that we listen to.

[A]

That's right. At Capital Group, values aren't just words. They shape how we work, invest and lead.

[B]

On the Capital Ideas podcast, you'll hear candid conversations about purpose, integrity and the culture behind one of the world's most respected investment firms. Listen and subscribe today. Published by Capital Client Group Inc. Now, our listeners of a certain age will remember the slogan that Delta Air Lines quote, loves to fly and it shows. Well, this morning the company released its quarterly earnings and the takeaway is that Americans indeed do still love to fly. And it looks in the numbers as though they like to fly. Delta. John, pilot us through the results.

[A]

That's right. All right, well, Delta has a market cap of nearly $40 billion and the past quarter they reported revenue of 15 billion, which was up 4% year over year earnings per share of $1.71, which beat estimates by nearly 20 cents. And it offered improved full year guidance and said sales trends have accelerated across all geographies in the past six weeks. So lots of optimism. And as a result, the stock was up as much as six and a half percent today.

[B]

So let's dig into what Delta actually said was working. And this is so much fun. I love talking about airlines. Anything to do with travel.

[A]

Sure.

[B]

So Ed Bastian, who's Delta CEO, said quote, Revenue grew 4% led by premium corporate and loyalty. Premium corporate and loyalty. So let's hone in on there. So, John, corporate sales jumped 8%. Premium revenues, that's flying business. And first and upgraded coach seats grew 9%. It doesn't feel like it's an accident that those two growth rates are so similar to each other.

[A]

No. And the results of a survey say that corporate travel is up 90%. Of surveillance said that in 2026 they expect to fly at least the same amount or more for a company work. So my question to you, Anne, is are airlines a bellwether for the environment in general? Like, if people are running up the expense reports, does that mean that the economy is doing well?

[B]

So to answer the question, and actually I'd love to get your perspective on this, let's go back in time. So at the beginning of this year, right. The beginning of 2025, Delta did issue some guidance for the fiscal year. Then do you remember this around Liberation Day, when tariffs were announced, Delta and others pulled guidance and said, look, we're just not going to be able to provide a perspective on how much travel we're going to see for the rest of 2025 till we understand how tariff shakeout, right.

[A]

There was concern of consumer sentiment being low and people would pull back from travel.

[B]

Exactly. Then once we saw some of these tariffs start to get resolved, they actually came out and gave some guidance and their share price popped right up because people were so relieved that any kind of guidance was on the table. And now we're seeing the share price go back up again because we are seeing not only conf so much so that there's a willingness to increase their outlook for the year, but also, look, some of these numbers are pretty good. So when I take a step back and say just the willingness to provide guidance or not does suggest to me that the airlines are a form of a bellwether stock, meaning an indicator for what's going on more broadly. Right. No one can deny that that pattern of guidance and not and Then guidance again reflected how people at large are sort of feeling in the wake of these tariffs. But one thing I would say here is the airlines are probably right now a bellwether for corporate activity. Because if you think about what happened after Covid, we saw a resurgence in individuals traveling again. Do you remember this? Revenge travel was back. People were tired of being at home and vacations and spending on seeing the world again became a really core spending priority for them. And what hasn't come back, at least until now, is business travel. Right. If you think about it, how many of your meetings are you doing in person now, John, versus what you were doing in 2019?

[A]

So few. There's zoom, there's Google Meets, There are the opportunities. Opportunity to not have to travel and you can meet. So very few.

[B]

And also businesses, right, aren't sending people to trade shows or conferences necessarily, or they haven't been. And it feels as though just to go back to Delta CEO Ed Bastian saying it's premium and it's corporate. That's what I'm reading as the airline saying, well, now we're seeing business travelers get back on in air and they're getting back out there and doing in person again. Now it's interesting that Delta has lifted the sector. But back to your bellwether point, other airlines are up too, right?

[A]

Right, exactly. Since Liberation Day. So back in April, Delta stock is up 76%, but also United stock is up 97%.

[B]

So it does feel as though two sides of the same coin. The premium segment doing really well, the budget airline struggling to make some money. We're actually going to hear earnings results come from other airlines later this month. It's going to be a lot of data coming out.

[A]

All right, so Ann, we've covered premium and corporate. Let's cover loyalty. So today in the press release, they talked about the customer experience and loyalty and different things that Delta has rolled out. So I'm going to ask you which of these three appeal to you as a traveler? Okay, so they launched YouTube as part of the in flight experience. So that's number one. They continue their SkyMile account with Uber. So when you're taking Uber down on the ground, you can get SkyMiles. And the third one is they're still rolling out what they call fast free wi fi across the plains. So of those three, which appeals to you for loyalty?

[B]

Okay, so I'm going to go through them one by 1. Launching YouTube as part of the in flight entertainment experience is absolutely nothing for me. So in full disclosure, if I'm not reading, reading a book and I'm a dinosaur. So I've got a physical book with me or if I'm not just working right, doing emails or catching up on doing spreadsheets or whatever it is, I'm doing that, you know, that's what I'm doing. I'm not looking at the little TV screen on the seat in front of me. So the YouTube thing doesn't do anything for me. I will say though, when it comes to the Sky Mile account linkage with a ride share, I use Lyft and I really miss the fact that when I use Lyft now I'm not racking up air miles on Delta, which used to be the case. So that, that did mean something to me. It's the last one of when I'm on a flight that offers free WI fi and I think JetBlue does or Delta does and you can get sort of 20 minutes if you watch an ad. As soon as that free WI fi runs out. It's incredibly expensive I think to get back online. So I actually like the free WI fi feature. That's probably the most important to me.

[A]

Yeah, absolutely. To stay connected. That would keep me loyal for sure.

[B]

Let's talk a little bit too, just on the, on the point of loyalty, one fun fact and I absolutely love talking about airlines because there's so many fun facts around airlines and I love to travel. These loyalty programs actually generate billions of dollars in revenue for these airlines every single year. So just to give you one example, in 2023 Delta received, this is, according to Forbes, nearly $7 billion from its American Express partnership alone. American airlines same period, $5.2 billion from CO branded credit card cards and other partnerships. This is super high margin revenue and this is literally where the airlines are going to credit cards and others and saying we've got affluent recurring travelers, we have a lot of insight into their preferences. Tack onto our miles programs with us. And I just point that out because it's, it's undercovered in these conversations, but it's critically important.

[A]

Well, it's a win win for both sides. You get into the lounge and the airline makes a little money.

[B]

Well, we're going to keep watching this because one thing that did not come up in the earnings in too much detail today simply because what I'm about to discuss happened after the period that the earnings finished and that is indeed the government shutdown. Right, John? We've still got air traffic control issues looking as though they could pick up. If you look at past government shutdowns. Air traffic control is one of the essential areas that does stay open, but it means we've got workers in ATC literally going to work right now not receiving their paychecks. And historically we've seen that as government shutdowns become protracted, a lot of folks end up taking time off. And so it just leads to a little bit more chaos in the airports. I'm not sure. Did the CEO actually say anything today, John, about this?

[A]

Yes, he had a very flat quote. We're hopeful that Congress will act to reopen the government as soon as possible.

[B]

I think that's a sentiment shared by a lot of people in the markets right now. Well, let's take a quick break and when we come back, when is owning a company like owning a house? We're going to frame the dividend recap conversation using Real Estate Brew Markets Daily is sponsored by Public, the platform for those who take investing seriously. Public combines a wide range of asset classes with the tools you need to build and manage your wealth, whether it's with stocks, options, bonds or crypto.

[A]

And if you have any questions about your investments, Public has Alpha, an AI powered research assistant that can help you find the answers you're looking for. In fact, AI is woven into the entire experience of Public, from portfolio insights to earnings call recaps. Public gives you smarter context at every.

[B]

Touch point and an uncapped 1% match when you transfer your old investment portfolio over to Public. So get started at public.com brewmarkets that's public.com brewmarkets full disclosures on public.com brewmarkets.

[A]

Upgrade your laundry routine with a durable and reliable Maytag laundry pair at Lowes, like the new Maytag Washer and Dryer with performance enhanced stain fighting power designed to cut through serious dirt and grime. And what's great is this laundry pair is in stock and ready for delivery when you need it the most. Don't miss out. Shop Maytag in store or online today at Lowe's.

[B]

John, we have a question from the audience.

[A]

That's right. Gabriel in Chicago wrote in to ask about one tool that private equity firms sometimes use with the companies they buy. Gabriel says, I was reading about dividend recapitalizations. Why would a company issue more debt just to offer dividends?

[B]

Well, first some definitions, and it's worth having in the back of our minds as we unpack this. Just what happens when someone buys a house because there are similarities. So imagine a private equity firm buys a company today for say, a billion dollars. And to do that. Let's Suppose it uses $250 million in equity, which is like using a down payment for a house. And then suppose that $750 million in debt, just like getting a mortgage. Now imagine that over a few years, this company generates a bunch of cash which is used to pay down some of that debt. Or imagine that market conditions or the industry get stronger or sudden, the company makes takes off, and there's a clear line of sight to more profit. All of these kinds of things would make lenders willing to extend more debt to that company than on the day the private equity firm's deal was first done. Then, under those circumstances, the company may decide to borrow more money, often hundreds of millions of dollars. And the business can use that new debt to pay its investor investors a dividend, meaning the private equity owner gets a payout but still holds on to the company still owns it. This process is called a dividend recapitalization, or a dividend recap for short. Now again, it's not dissimilar to owning a home. Suppose you buy a house and pay down some of the mortgage each year, and that after a few years, mortgage lenders feel better about the economy or feel better about your income level and therefore feel even better about your ability to take on a bigger mortgage than at the time you first bought that house. House maybe. Then you decide to refinance your mortgage, taking the amount of debt against your home back up, even though you've just been paying it off. That enables you to both keep your house and get some cash out to use for something else. Now, private equity firms have used dividend recaps opportunistically. So when stronger market conditions or a company's product success creates a window to get cash out while keeping ownership. Private equity firms have also used these as an interim step to return some cash to investors at a point in time, but still waiting longer to just outright sell the company in the hopes of getting a higher price for it down the line. Now, critics say dividend recaps risk overloading otherwise healthy businesses with debt at a time when markets may actually be frothy. Supporters argue it's just another financial tool and one that rewards investors for taking on risk in the first place. So here is why. Gabriel it's particularly interesting to look at this right now. When interest rates come down, private equity firms tend to explore the possibility of dividend recaps a little bit more, because here's a chance to not just get some cash, that's the dividend out, but also to try to get the average cost of debt down on the company they own at the same time. So with more interest rates cuts looming in the US we're definitely going to keep watching this one.

[A]

And if you have a question for Ann, send us a voice memo or email to brewmarketshoworningbrew.com well, it's 4pm on the east Coast.

[B]

There is the closing bell. The market's wrapping up for the day and we don't have a ticker tape, but we're going to throw it over to our human ticker, our producer John.

[A]

That's right, all the major indices finished down today with the S&P 500 down a quarter of a percent, the NASDAQ down a tenth of a percent, and the Dow down half a percent. Some market headlines, shares in Ferrari fell 16% after the carmaker ticker race issued a cautious long term forecast at a highly anticipated investor day. That along with muted interest in the 2026 release of the company's EV vehicle dubbed the Ferrari Electrica. And Costco shares up 2 1/4% today as the warehouse retailer reported an 8% increase in September sales, bolstered by a 6% increase in membership.

[B]

We love any excuse to talk about Costco. It's so much fun. We're gonna have to do a field trip and go film from up there at some point. Well, here's a final thought. We've been talking a lot on the show lately about what's going on in the realm of social media. We've seen Reddit striking deals to license some content to the likes of Open AI. We've been talking about what happens when the tick tock deal basically gets resolved. And all of this is basically a set of data around the play that is the attention economy, the streamers, social media vying to try and get our eyeballs on them. Well, there was an interesting development today in on two fronts. First of all, Warner Music Group is apparently nearing an agreement with Netflix to create a variety of movies and documentaries based on the label's artists and some of the songs that they generate. Bloomberg reporting on this today. It's another move by Netflix to try to find a way to get proprietary content that differentiates itself from other streamers. So it's a very interesting move. The second thing that we saw today, Instagram reportedly looking to launch a dedicated TV app. The idea being this is Meta's way of going after YouTube. Now these two things, the streamers and social media and then tv all starting to converge on each other on each other. So we're going to keep watching this one. That's it, folks, for today's Brew Markets Daily.

[A]

Brew Markets Daily is hosted by Anne Barry and produced by John Cotto, Tarek Abdelatif and Emily Milian. Our technical director is Uchena Wagu and the president of Morning Brew Inc. Is Devin Emery.

[B]

Wake up tomorrow with the Morning Brew newsletter and tune in to Neela and Toby on Morning Brew Daily. We'll see you back here tomorrow, same time, same place.

[A]

Nemo Gay Mo and Doug Limu and I always tell you to customize your car insurance and save hundreds with Liberty Mutual. But now we want you to feel it. Cue the emu music. Limu.

[B]

Save yourself money today. Increase your wealth. Customize and save. We save.

[A]

That may have been too much feeling. Only pay for what you [e-mail] Liberty Liberty, Liberty, Liberty Savings. Very underwritten by Liberty Mutual Insurance Company affiliates. Excludes Massachusetts.