By Ananya Mariam Rajesh

(Reuters) -PepsiCo on Friday reported a surprise drop in quarterly sales and forecast a sharp slowdown in organic revenue growth for 2024 as multiple price hikes weigh on demand for its beverages and chips, sending its shares down as much as 4%.

The company said demand has started to wane mainly in the U.S., where consumers are balking at higher prices for sodas and snacks after two years of PepsiCo passing on higher production costs to customers to shield its margins.

"We are seeing a bit of a slowdown in the U.S.," CEO Ramon Laguarta said on a post-earnings call. Both food and beverages slowed in the fourth quarter, he said, in part due to pricing and tightening household budgets.

In January, Carrefour, Europe's largest food retailer, asserted it would not be stocking PepsiCo's brands "due to unacceptable price increases".

PepsiCo's fourth-quarter revenue fell 0.5% to $27.85 billion, the first drop in 14 quarters. Analysts had expected a 1.4% rise to $28.40 billion, according to LSEG data.

Everybody had high expectations with PepsiCo's performance so far, said Don Nesbitt, portfolio manager at ZCM, which holds an about 1% stake in the Doritos maker.

"We knew that they weren't going to be able to push through as much pricing as they have in the past."

The soda and snacks giant forecast annual organic revenue growth of at least 4%, compared to the 9.5% growth reported for fiscal 2023.

However, the company expects fiscal 2024 core earnings per share of $8.15, compared with expectations of $8.14.

PepsiCo expects raw material costs to moderate from the levels seen in fiscal 2023, Chief Financial Officer Jamie Caulfield said.

It also announced a 7% increase to its annual dividend.

In the fourth quarter, core gross margin expanded 97 basis points as average prices jumped 9%. Organic volume slipped 4%.

"The volumes again are not kind of performing...they are not getting the improvement in tandem with the moderating levels of pricing... that is likely going to be a headwind for them over the near term," Wedbush analyst Gerald Pascarelli said.

(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Sriraj Kalluvila)