PepsiCo feels squeeze as financial pressure spreads from low-income consumers
By Jessica DiNapoli and Ananya Mariam Rajesh
NEW YORK, July 11 (Reuters) -PepsiCo PEP.O CEO Ramon Laguarta said Thursday there is "much more price sensitivity" across U.S. income groups and not just low-income consumers, highlighting its sensitivity to broad shifts in consumer demand.
The Diet Pepsi and Tostitos tortilla chips maker, which fell short of Wall Street expectations for revenue for its second quarter Thursday, said consumers continued to face a squeeze from rising prices and constrained wages.
"They're saying 'There's been a lot of inflation and my disposable income is stretched,'" Laguarta said in an interview. "It's not only the lower-income consumer, it's throughout."
Companies like PepsiCo hiked prices by double digits during and after the pandemic to recoup once-in-a-generation levels of cost inflation. On Thursday, the New York-based company said it had raised prices by 5% overall in the most recent quarter ended June 15, helping protect its margins which rose compared with a year before.
Costs have started to come down, with U.S. consumer prices unexpectedly falling in June. But some costs, like agricultural commodities, remain elevated, PepsiCo said Thursday in prepared remarks.
Laguarta had said in April that lower-income consumers were "stretched" and "strategizing a lot to make their budgets get to the end of the month."
In a call with analysts Thursday, he said higher-income consumers were skipping meals at expensive restaurants and dining at cheaper ones instead, or opting out of them altogether for at-home entertainment options.
"Once we address that situation, we'll be back in growth, and we feel pretty good about the tools and the resources we have," Laguarta said.
PepsiCo is investing in parts of its Frito-Lay North America business, its second-largest after beverages, to keep consumers buying its popcorn, potato and tortilla chips.
The company is also looking to cut costs and make its business more efficient, Laguarta said.
Brian Jacobsen, chief economist at Annex Wealth Management, said: "Consumers are feeling the pinch of high prices. Last year the consumer was told to just be quiet and accept higher prices. Now they're fed up.
"Wage gains are okay, but they're not great, so consumers are rebelling by cutting back on non-essentials and shopping around for everything else," Jacobsen added. "It's not a trend that's anything to worry about. It's just a return to prudence instead of profligacy."
Reporting by Jessica DiNapoli in New York and Ananya Mariam Rajesh in Bangalore; Editing by David Holmes
Activos relacionados
Últimas noticias
Descargo de responsabilidades: Cada una de las entidades de XM Group proporciona un servicio de solo ejecución y acceso a nuestra plataforma de trading online, permitiendo a una persona ver o usar el contenido disponible en o a través del sitio web, sin intención de cambiarlo ni ampliarlo. Dicho acceso y uso están sujetos en todo momento a: (i) Términos y Condiciones; (ii) Advertencias de riesgo; y (iii) Descargo completo de responsabilidades. Por lo tanto, dicho contenido se proporciona exclusivamente como información general. En particular, por favor tenga en cuenta que, los contenidos de nuestra plataforma de trading online no son ni solicitud ni una oferta para entrar a realizar transacciones en los mercados financieros. Operar en cualquier mercado financiero implica un nivel de riesgo significativo para su capital.
Todo el material publicado en nuestra plataforma de trading online tiene únicamente fines educativos/informativos y no contiene –y no debe considerarse que contenga– asesoramiento ni recomendaciones financieras, tributarias o de inversión, ni un registro de nuestros precios de trading, ni una oferta ni solicitud de transacción con instrumentos financieros ni promociones financieras no solicitadas.
Cualquier contenido de terceros, así como el contenido preparado por XM, como por ejemplo opiniones, noticias, investigaciones, análisis, precios, otras informaciones o enlaces a sitios de terceros que figuran en este sitio web se proporcionan “tal cual”, como comentarios generales del mercado y no constituyen un asesoramiento en materia de inversión. En la medida en que cualquier contenido se interprete como investigación de inversión, usted debe tener en cuenta y aceptar que dicho contenido no fue concebido ni elaborado de acuerdo con los requisitos legales diseñados para promover la independencia en materia de investigación de inversiones y, por tanto, se considera como una comunicación comercial en virtud de las leyes y regulaciones pertinentes. Por favor, asegúrese de haber leído y comprendido nuestro Aviso sobre investigación de inversión no independiente y advertencia de riesgo en relación con la información anterior, al que se puede acceder aquí.
