Is PepsiCo Stock Halal?

PepsiCo generated $93.93 billion in net revenue in fiscal 2025 across two core businesses: beverages (Pepsi, Mountain Dew, Gatorade, Tropicana, bottled water) and convenient foods (Frito-Lay snacks, Quaker Oats cereals and grains). Both segments sell ordinary consumer packaged goods through conventional retail and food service channels, and neither involves alcohol, gambling, or interest-based lending as a core activity. PepsiCo's snack and beverage brands are sold in more than 200 countries, and the underlying business, manufacturing and marketing food and drink, is permissible. The one item that regularly comes up in halal screening discussions is Hard Mountain Dew, an alcoholic malt beverage launched under license from PepsiCo. PepsiCo does not manufacture or sell Hard Mountain Dew: Boston Beer Company does, under a brand licensing agreement, similar in structure to Coca-Cola's arrangement with Molson Coors for Topo Chico Hard Seltzer. PepsiCo did distribute the product through a wholly owned distributor from 2022 until 2024, when it shifted its alcoholic beverage business to a trademark licensing and flavor sales model, per its own 10-K.

PepsiCo's fiscal 2025 income statement reports a single combined line, "Net interest expense and other," of $1,121 million; it no longer breaks interest income out separately. The 10-K does disclose gross interest expense of $1,840 million in a supplementary reconciliation, which implies roughly $719 million of interest income and other non-operating items. PureInvest uses that derived $719 million as the impure income estimate, and flags it as an estimate rather than inventing precision the filing does not provide. There is no disclosed royalty revenue from the Hard Mountain Dew licensing arrangement, and given Boston Beer Company (not PepsiCo) manufactures and books the product's sales, any licensing fee PepsiCo collects would need to be quite large relative to PepsiCo's $93.93 billion revenue base to meaningfully affect the compliance calculation, and there is no public evidence that it is.

At an estimated 0.77% impure revenue, PepsiCo sits 4.23 percentage points below the 5% AAOIFI compliance threshold, one of the wider margins among large-cap consumer staples companies. PepsiCo's derived interest income and other figure would need to grow roughly sixfold relative to total revenue before approaching the compliance boundary, an unlikely scenario given the company's scale and the relatively modest size of its cash and short-term investment balances relative to total revenue. PepsiCo's debt levels and interest-bearing securities also sit within AAOIFI's financial ratio screens relative to its market capitalization. This is consistent with Muslim Xchange's compliant rating, though Musaffa currently classifies PepsiCo as "Doubtful," a more cautious read that appears to weigh the Hard Mountain Dew brand licensing arrangement as a qualitative concern even though it does not show up as disclosed revenue.

PepsiCo is suitable for Shariah-conscious investors seeking exposure to global food and beverage brands. The purification obligation is small, $0.77 for every $100 invested, reflecting a revenue base built almost entirely on snacks and non-alcoholic beverages. Investors with strict personal standards around brand licensing should note that Mountain Dew's name appears on an alcoholic product made by a different company, a structure PureInvest's revenue-based screen does not penalize since PepsiCo does not recognize the alcohol sales itself, but one that more conservative investors may still want to weigh. Consult a qualified Shariah advisor if you have concerns that go beyond the standard AAOIFI revenue and financial ratio screens.