What factors are contributing to the growth of the global food and beverage industry? How does PepsiCo, Inc. (NASDAQ:PEP) compare to other food stocks recommended by billionaires? What role does consumer demand for healthier food alternatives play in shaping the food market? How have inflation and supply chain issues affected food prices recently? In what ways are technological advancements, such as AI and robotics, impacting the future of the food industry?
We recently published a list of 10 Best Food Stocks to Buy According to Billionaires. In this article, we are going to take a look at where PepsiCo, Inc. (NASDAQ:PEP) stands against other best food stocks to buy according to billionaires.
A significant contributor to the global economy, the food business has changed over time to meet shifting consumer needs, technological breakthroughs, and market conditions. The worldwide food and beverage industry was estimated to be worth $6.96 trillion in 2024 and is projected to grow to $7.4 trillion by 2025, according to The Business Research Company. Rapid urbanization, rising consumer spending, and a greater need for quick and healthful food options have all contributed to the industry’s growth. On the other side, businesses must contend with shifting trade regulations, supply chain limitations, and inflationary pressures.
The growing desire for more sustainable and healthful food options has a significant impact on the food sector today. According to Future Market Insights, the global market for healthy foods is anticipated to reach $897 billion by 2025 and expand at a compound annual growth rate (CAGR) of 9.7% to reach $2.2 trillion by 2035. Awareness of diet and its connection to long-term health issues, including obesity, diabetes, and heart disease, is driving change in the food market. Organic, non-GMO, and fortified food is in high demand as consumers seek clean-label, minimally processed, and plant-based substitutes.
Additionally, the food-away-from-home (FAFH) industry is expanding at an unprecedented rate. Spending at food service establishments broke pre-pandemic records in 2021 and reached $2.6 trillion in 2023, according to the U.S. Department of Agriculture. Full-service and limited-service eateries accounted for about 69% of all FAFH spending to fuel this expansion. The burgeoning market for digital ordering platforms and the rising demand for convenient dining-out options are the main drivers of this expansion. Menus are changing as a result of rivalry between full-service and limited-service eateries. This is made possible by traditional restaurants emphasizing convenience and delivery optimization, while quick-service restaurants are expanding their premium menus.
For the industry, inflation is still a big worry, though. In December 2024, grocery prices jumped 1.8% year over year, while the cost of eating out rose 3.6%. Supply chain interruptions and rising manufacturing costs were the main causes of these spikes. Furthermore, the Food Price Index increased by 1.6% month over month in February 2025, according to the FAO, as food price inflation continues to be a serious concern, mostly due to rising costs for sugar, dairy, and vegetable oil. Businesses are aggressively seeking to implement pricing optimization techniques, sustainability programs, and cutting-edge supply chain technologies to allay these worries and preserve profits.
Furthermore, technological innovation is significantly changing the food industry’s future. Artificial intelligence (AI) and robotics are being utilized to improve supply chains, boost industrial efficiency, and reduce food waste.
The food industry’s long-term prospects are still bright despite these worries. Urbanization, the growth of the middle class, and shifting customer preferences all continue to help the industry. As a result, top food stocks provide investors with an amazing opportunity and an average yearly return of 32.25%. Businesses that prioritize health-conscious options, integrate innovation, and advance sustainably will be well-positioned for future growth.
For this article, we selected stocks from the First Trust Nasdaq Food & Beverage ETF and the Invesco Dynamic Food & Beverage ETF. These ETFs provided exposure to U.S. companies comprising the food and beverage sector. We then shortlisted these stocks based on the highest number of billionaire holdings tracked by the Insider Monkey Q4 2024 database. In cases where multiple stocks had the same number of billionaire holdings, we used the dollar value of these holdings as a tiebreaker. Finally, the stocks were ranked in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Is PepsiCo, Inc. (PEP) the Best Food Stock to Buy According to Billionaires?
Total Number of Billionaires: 14
Dollar Value of Billionaire Holdings: $2,120,308,323
PepsiCo, Inc. (NASDAQ:PEP) manufactures, markets, distributes, and sells beverages, food, and snacks. The business is divided into the following segments: Asia Pacific, Australia and New Zealand, and China Region (APAC); Latin America (LatAm); Europe, Africa, Middle East, and South Asia (AMESA); Frito-Lay North America (FLNA); Quaker Foods North America (QFNA); and PepsiCo Beverages North America (PBNA).
PepsiCo, Inc. (NASDAQ:PEP) produced $12.5 billion in operating cash flow in the fiscal year 2024 and has a healthy cash position. Additionally, the business maintained a consistent revenue of $91.8 billion, which was somewhat higher than the previous year. In this fiscal year, it intends to pay out dividends to stockholders totaling about $7.6 billion.
Additionally, the company’s net income improved to $9.6 billion, while operating profit increased to $12.8 billion from $11.9 billion in the fiscal year 2023. PepsiCo, Inc. (NASDAQ:PEP) anticipates a mid-single-digit increase in core constant currency earnings per share (EPS) and low-single-digit growth in organic revenue for 2025.
Overall, PEP ranks 3rd on our list of best food stocks to buy according to billionaires. While we acknowledge the potential of food companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than PEP but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
Is PepsiCo (PEP) the Best Food Stock to Buy According to Billionaires?
In an ever-changing financial landscape, investors are on the lookout for solid stocks that can provide reliable returns, especially in the food sector. Billionaires and financial magnates often serve as bellwethers in their investment strategies, and one of the stocks they frequently consider is PepsiCo (NASDAQ: PEP). With a portfolio that spans beverages, snacks, and wellness products, PepsiCo has established itself as a titan in the food industry. So, is PepsiCo the best food stock to buy according to billionaire investors?
PepsiCo’s Robust Business Model
PepsiCo operates one of the most diverse and broadest product lines in the food and beverage industry. From its flagship cola to Gatorade, Tropicana, and an array of snack foods under the Frito-Lay brand, the company has something for everyone. This diverse product offering allows PepsiCo to weather economic downturns better than its competitors, as demand for food and beverages generally remains stable even during austere times.
Billionaires are generally drawn to companies that exhibit robust business models, and PepsiCo does not disappoint. The company has continuously demonstrated strong revenue growth, stable profit margins, and an impressive return on equity. Its consistent performance makes it a solid choice for long-term investors seeking reliable dividends and capital appreciation.
Strategic Acquisitions and Innovations
PepsiCo has shown an astute ability to adapt to changing consumer preferences, which is another quality that catches the eye of billionaire investors. In recent years, the company has focused on healthier product options as consumers increasingly demand nutritious and sustainable alternatives. This shift in focus has led to strategic acquisitions, including Bare Foods, a maker of baked vegetable chips, and SodaStream, which allows consumers to carbonate their drinks at home.
These acquisitions demonstrate PepsiCo’s readiness to innovate and diversify its offerings, an essential consideration for many high-net-worth individuals who seek growth sectors within the food industry. By positioning itself in the health-conscious market, PepsiCo mitigates risks associated with changing consumer behaviors and can more readily capture new revenue streams.
Financial Performance
Billionaires often scrutinize financial metrics when deciding where to invest. PepsiCo’s financials speak for themselves, showcasing a healthy balance sheet and consistent cash flows. The company has a long-standing tradition of paying dividends, a quality that is highly appealing to income-focused investors. PepsiCo’s commitment to returning value to its shareholders is evident in its decades-long history of dividend increases.
In recent years, PepsiCo has reported impressive revenue growth, with a sizable uptick attributed to increased demand for snack foods during the pandemic. According to its latest quarterly earnings report, the company has consistently beaten earnings expectations, which adds to its appeal among sophisticated investors and billionaire fund managers.
Resilience Against Economic Downturns
The food and beverage industry is often considered a "defensive sector" in economic downturns, and PepsiCo fits squarely within this category. Billionaires like Warren Buffett have historically gravitated toward consumer staples stocks, stemming from the knowledge that people will always need food and beverages, regardless of economic conditions.
During turbulent times, such as the financial crisis of 2008 and the ongoing ripple effects of the COVID-19 pandemic, PepsiCo has demonstrated resilience. This resilience is a major factor that makes it appealing among billionaire investors who prioritize safety and long-term growth.
Competitive Advantage
PepsiCo’s operational and marketing prowess lends it a substantial competitive advantage. The company’s strong brand recognition, extensive distribution network, and ability to leverage economies of scale make it difficult for competitors to replicate its success. Billionaires and hedge funds often favor companies with strong brand equity and scalability, urging them to invest in PepsiCo.
Moreover, PepsiCo leverages advanced technology and data analytics to understand consumer behavior, from product development to supply chain optimization. This intelligence-driven approach not only enhances operational efficiencies but also positions the company favorably against its rivals.
Final Thoughts
PepsiCo appears to be a compelling investment opportunity in the food sector, not just for individual investors but especially for billionaires looking for stability, growth, and reliable returns. Its diverse product portfolio, strategic focus on health-conscious offerings, financial resilience, and strong competitive advantage collectively position it as one of the best food stocks available today.
While it is crucial to conduct thorough research before making any investment decisions, the consensus among many billionaire investors leans towards PepsiCo being a wise choice in an uncertain economic climate. Its ability to navigate challenges while continuously innovating makes it a formidable player in the food sector, embodying the qualities sought after by the world’s wealthiest investors. Thus, for those contemplating where to allocate their resources in the food industry, PepsiCo stands out as a robust candidate.
When evaluating whether PepsiCo (PEP) is the best food stock to buy according to billionaires, it’s helpful to consider various factors such as financial performance, market positioning, and expert endorsements.
Financial Performance: Analyzing PepsiCo’s revenue growth, profit margins, and overall financial health is essential. Look at its quarterly earnings reports and compare them with competitors in the food sector.
Market Positioning: PepsiCo’s diversified product portfolio, which includes snacks, beverages, and health-conscious options, gives it a competitive edge. Assess how well the company adapts to changing consumer preferences, such as trends towards healthier eating.
- Billionaire Endorsements: Investors often look to billionaires and successful fund managers for insights. If notable figures like Warren Buffett or others in the investment community have significant holdings in PepsiCo, it may reflect confidence in the company’s prospects.
Ultimately, the best stock decision will depend on individual investment strategies, risk tolerance, and market conditions. It’s advisable for investors to conduct their own research or consult financial advisors before making investment choices.