PepsiCo has reported that the US economic downturn has impacted its sales of soft drinks, with sales volumes falling by 3% in North America for the second quarter to 14 June. The company has benefited, however, from strong snack food sales and a weak dollar, with net income increasing to $1.7bn (£849.1m) from $1.56bn a year earlier. The group said that the fact that it made a wide range of products and did business in many countries made it easier for it to offset the pressures of rising commodity costs and the US slowdown. At PepsiCo International, which includes beverages and snacks outside of North and Latin America, the group saw revenue rise 25%, with drinks volume up 13%. Indra Nooyi, PepsiCo’s chief executive, said that the company forecast continued strength in earnings for the second half of the year, and that its broad portfolio would help it produce consistent results. Nooyi warned, however, that the third quarter would be “interesting”, as it would feel the impact of commodity price rises, with the company expecting to see costs up by 9% and 10% in 2008. She also said that she was unsure how long before sales of fizzy drinks, which fell 2% in volume during the quarter, returned to strong growth. She described US soft drinks sales as in an “unprecedented slowdown” that had also hit the company’s Aquafina bottled water, as consumers switched to tap water in a bid to save money and reduce waste. The company said that it was working on a plan to cut manufacturing, logistics and delivery costs and would give details at the end of the third quarter or early in the fourth quarter.