PepsiCo Says No More Price Hikes After Better-Than-Expected Quarterly Results

PepsiCo Inc. said on Thursday it will not further raise prices of its sodas and snacks after multiple rounds of price hikes last year that helped the beverage giant post fourth-quarter profit and revenue ahead of analysts’ estimates.

PepsiCo, which shares a near duopoly with Coca-Cola Co. in the carbonated drinks industry, has raised its prices with little resistance from customers over the last quarters as it fights higher freight, commodity, labor costs, and the impact of a weaker dollar on international revenues.

“We have most of our price increases for the year already in place,” Hugh Johnston, Chief Financial Officer at PepsiCo told Reuters that a high percentage of pricing for 2023 would be a result of past year’s actions.

The company anticipates that inflationary pressures will continue in 2023 but it still believes consumer demand is resilient.

PepsiCo in a “real sweet spot” Johnston stated that consumers are more likely to have the money to purchase affordable treats than they are in terms of their consumption.

The company’s shares rose 2 percent to $174.44 in premarket trading as the company also raised its annual dividend by 10 percent to $5.06 per share.

PepsiCo’s North America beverages unit, which houses brands such as Mirinda and 7UP, posted an organic revenue growth of 10 percent in the fourth quarter.

The average price of goods rose 16 percent during the quarter, but organic volume fell 2 percent.

“As we transition through COVID we see volumes and pricing as an important factor, but, believe company’s strong brand position … (will) help during the inflationary period, like it navigated during the pandemic,” Markus Hansen, a portfolio manager at Vontobel Quality Growth, said.

Frito-Lay however forecast an annual profit lower than estimates and said that prices will be challenged in the second part of the year.

PepsiCo’s fourth quarter earnings beat estimates by $1.65 on an adjusted basis according to Refinitiv data.

By Ananya Mariam Rajesh

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