PepsiCo lowers expectations due to reluctant consumers

PepsiCo‘s sales increased more than expected last year, as it was able to raise its prices sharply, but volumes are under pressure as consumers are increasingly reluctant to digest persistent inflation. 

Looking for cheaper alternatives

With sales rising 8.7 % from 79.5 to 86.4 billion dollars (80 billion euros), PepsiCo had a strong financial year. Profits rose from 7.7 to 9 billion dollars (more than 8 billion euros). Those fine figures are largely due to price increases: in the fourth quarter alone, PepsiCo managed to raise prices by an average of 16 %.

By contrast, volumes fell by 2 %, as ongoing inflation weighs on consumer demand. While the manufacturer of A-brands such as Pepsi, Lays and Doritos is forced to pass on rising production and supply costs, more shoppers are looking for cheaper alternatives. This is forcing the multinational to make cautious estimates for 2023: organic growth is expected to be around 6 %.

PepsiCo is not the only brand manufacturer to notice that consumers are not continuing to swallow the succession of price increases without a problem. Earlier today, Unilever also reported a 2.1 % drop in volumes as prices rose 11.3 %. Yesterday, Carlsberg warned that high inflation will have a negative impact on beer consumption, especially in Europe. Those falling volumes are ultimately going to weigh on profit growth as well.