Business

PepsiCo CFO says more price hikes could be on the way in the first quarter

Hugh Johnston

David A. Grogan | CNBC

PepsiCo CFO Hugh Johnston is anticipating one other spherical of worth hikes on the corporate’s snacks and drinks early subsequent 12 months.

“I anticipate we’ll in all probability see a little bit bit extra pricing will increase within the first quarter of subsequent 12 months as we cope with the truth that enter prices are simply larger,” Johnston mentioned Tuesday on CNBC’s “Squawk Box.” “That is simply the fact for us and everyone else.”

This summer season, and into the autumn, Pepsi’s drink costs have been rising, whereas its snack costs are beginning to climb now, based on Johnston. Different shopper packaged items firms, like Procter & Gamble and Pepsi’s rival Coca-Cola, have also been hiking prices this 12 months to offset the blow from larger prices, that are consuming into income.

Like all meals and beverage giants, Pepsi buys the commodities and supplies it wants months prematurely. However these contracts do not assist the corporate escape inflation.

“The ahead shopping for can solely achieve this a lot for us. What it does is purchase us about six to 9 months of room, so to talk,” Johnston mentioned.

That wiggle room permits the corporate and retailers to ease shoppers into the upper costs, saving them from sticker shock.

CEO Ramon Laguarta informed analysts on the corporate’s convention name that customers are pricing a little bit bit otherwise than earlier than. He mentioned that the modifications might be as a result of energy of its manufacturers and up to date innovation.

“There might be additionally some behaviors as shoppers are buying quicker in-store, they usually is likely to be paying much less consideration to pricing as a choice issue, and there is likely to be much more relevance to the manufacturers,” Laguarta mentioned.

During the third quarter, Pepsi noticed larger prices tied to inflation for labor, commodities and transportation, significantly for its Quaker Meals North America enterprise unit. The corporate’s web revenue fell 3% for the quarter, regardless of web income development of 11.6%.

Shares of Pepsi rose about 1% on Tuesday after the corporate topped analysts’ third-quarter estimates and raised its full-year income forecast.


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