image credit: pepsico
PepsiCo CEO Ramon Laguarta’s statement on Thursday that there is “much more price sensitivity” across U.S. income levels emphasizes its sensitivity to broad consumer demand swings.
Diet Pepsi and Tostitos tortilla chips producer fell short of Wall Street revenue projections for its second quarter Thursday, saying rising prices and reduced wages squeezed consumers.
“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 raised prices by double digits during and after the pandemic to recover from once-in-a-generation cost inflation. The New York-based corporation boosted prices by 5% in the quarter ended June 15, protecting margins that climbed compared to a year earlier, on Thursday.
In June, U.S. consumer prices unexpectedly fell. However, agricultural goods remain expensive, PepsiCo said Thursday in prepared statements.
Once we address that situation, we’ll be back in growth, and we feel pretty good about the tools and the resources we have,” he said.
PepsiCo is investing in certain portions of Frito-Lay North America, its second-largest division after drinks, to keep consumers buying popcorn, potato, and tortilla chips.
Laguarta said the corporation wants to minimize expenses and improve efficiency.
Annex Wealth Management head economist Brian Jacobsen: “High prices hurt consumers. Last year, consumers were advised to keep quiet and endure rising prices. Their patience has run out.Customers are rebelling by cutting back on non-essentials and looking around for everything else because wage gains are okay but not great “Jacobsen noted. “This tendency isn’t concerning. A return to prudence instead of frivolity.”
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