PepsiCo Inc

cut its earnings growth targets for 2011 and beyond on Thursday, citing higher commodity costs, a difficult economy and investments in emerging markets.

Chief Executive Indra Nooyi, who was peppered with tough questions by analysts during a tense conference call, said the lowered longer-term outlook was prudent given the uncertain economic conditions.

We have no idea what the commodity markets are going to look like in 2012 and beyond, Nooyi said on the call. We have no idea what the developed market economic situation is going to be, whether it's going to improve robustly or whether the sluggishness is going to continue.

The results come a day after rival Coca-Cola Co surprised the market with sales volume increases in all of its segments.

The maker of Pepsi-Cola and Frito Lay snacks saw its shares fall 2 percent in morning trading, despite posting fourth-quarter sales and earnings that beat Wall Street estimates. Coca-Cola shares were up slightly.

PepsiCo said it now expects 2011 earnings to rise 7 percent to 8 percent, with high single-digit growth beyond that. It had earlier forecast low double-digit percentage rate growth for 2011 and 2012.

Yet given the uneven economic recovery and the spikes in commodity prices, Pepsi's forecast was not bad, said James Tierney, chief investment officer of WP Stewart and a PepsiCo shareholder.

Relative to the industry, PepsiCo is one of the best houses in a really tough neighborhood, Tierney said.

PepsiCo Chief Financial Officer Hugh Johnston said the company expects commodity costs to rise $1.4 billion to $1.6 billion, or 8 percent to 9.5 percent, this year, but that PepsiCo will be careful not to raise prices so much as to alienate consumers.

Morningstar analyst Phil Gorham noted that the company took on more exposure to commodity costs when it bought its two largest bottlers last year.

With the costs of sweeteners at multiyear highs, margin pressures are likely to remain until consumers become willing and able to bear the burden of rising costs, Gorham said in a research note.

In the fourth quarter, PepsiCo's net income fell 5 percent to $1.37 billion, or 85 cents per share, from $1.43 billion, or 90 cents per share, a year earlier.

Excluding items, earnings were $1.05 per share, topping analysts' average estimate of $1.04 per share, according to Thomson Reuters I/B/E/S.

Its sales jumped 37 percent to $18.16 billion, helped by the acquisition last year of its two largest bottlers. Analysts were expecting revenue of $17.6 billion.

Fourth-quarter volume rose 2 percent for the Americas Foods business and 14 percent in the Americas Beverages business. Including PepsiCo's international businesses, total volume rose 3 percent in snacks and 12 percent in beverages.

Excluding added volume the company took on as part of its bottler acquisition, North American volume rose 1 percent, trailing the 3 percent growth seen by Coca-Cola, which gained market share.

PepsiCo shares were down $1.29 at $63.13 in late-morning trade on the New York Stock Exchange.

(Reporting by Martinne Geller, editing by Dave Zimmerman and Maureen Bavdek)