The price increase has resulted in PepsiCo in the first three months of the year, in which it reported an increase in profits of 9.3%, to bring them up to $16,200 million, reported the company.
The decision to raise prices in the midst of a high inflation scenario has paid off for the time being and has prevented consumers from abandoning the brand or buying less.
PepsiCo decided to raise up to 12% the prices of several of your products most popular, mainly in its beverage, food and snack divisions, according to a report by The New York Times .
At the same time, the company has faced an escalation in production and distribution costs , in addition to the pressures transferred by having left most of its operations in Russia, due to the military invasion in Ukraine.
The unpopular decision to increase prices was what mainly fueled their profit growth in the first quarter of the year, the company detailed in a call with Wall Street investors and analysts.
In the case of the Fried food division lay North America, PepsiCo had a 2% increase in its sales volumes, from an increase of 12% in products such as Lay’s, Doritos and Cheetos.
For Grupo Quaker Foods, the increase of 12% in the price of its products led to offsetting a 1.5% drop in its sales volumes between January and March last.
PepsiCo’s net income was $4,241 million dollars, compared to $1,700 million dollars of the first quarter of 2021.
Price increases will continue
PepsiCo considers that its consumers are still in a adjustment process on the impacts that the worst inflation in 40 years leaves for their family finances.
Given the above, the company considers that its buyers are still willing to pay for its products, even with price increases, before that they decide to buy less or look for cheaper options.
“We believe that the consumer is very early in the process of adjusting to the new inflationary environment”, said Ramón Laguarta, executive director of PepsiCo, in the aforementioned call with analysts and investors.
Laguarta assured that the objective of the company is to keep consumers with its brands, while acknowledging that they will keep a close watch on the behavior of consumers, even with possible new price increases.
Like other sectors, PepsiCo recognizes that the rise in prices for producers, in basic supplies and transportation, have been higher than expected.
The company is also weighing the consequences of the closure of operations in Russia, from the military invasion in Ukraine, from which it has subtracted $300 million in charges for leaving this country.
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