PepsiCo Inc (PEP.O) said on Tuesday its intention to implement “modest” price increases next year, despite several prior hikes. The snacks and beverages giant, home to brands like Mirinda and Gatorade, raised its 2023 profit forecast for the third consecutive time as demand remained resilient.
PepsiCo’s move amidst growing concerns that frequent price hikes could dampen consumer demand.
Countries like France are also advocating for price reductions to curb inflation. Chief Financial Officer Hugh Johnston disclosed in an interview with Reuters.
During the quarter ending on 9 September, average prices surged by 11 per cent, while organic volume experienced a 2.5 per cent decline.
Despite the flexibility in profit margins, allowing the company to maintain or even decrease prices, Brian Mulberry, client portfolio manager at Zacks Investment Management, noted that the company has not reached a point where it feels the need to reduce prices drastically.
PepsiCo and its competitor Coca-Cola (KO.N) have enjoyed advantages in the global carbonated drinks market, capitalising on cost-conscious consumers who consider their products “affordable luxuries.”
Addressing concerns about the popularity of weight-loss drugs like Wegovy and Ozempic potentially altering consumption patterns. The rise in demand for such drugs has raised worries about potential sales impacts on major packaged food companies.
The company’s adjusted profit of USD 2.25 per share exceeded expectations of USD 2.15 according to LSEG data.
(Reuters)
