Customers are choosing smaller packs and cheaper alternatives, such as those by private labels
PEPSICO missed expectations for second-quarter revenue on Thursday (Jul 11), as it faced weak demand for its snacks and sodas mainly in the US – the company’s largest market.
Inflation-weary US consumers have cut back spending on sodas and salty snacks, prompting PepsiCo to double down on promotions and marketing efforts to bolster volume growth.
The company’s growth in sales volume has weakened in the last few quarters due to price increases.
Customers are also opting for smaller packs and cheaper alternatives, such as those offered by private labels. This comes after branded packaged-food companies raised prices to cover rising production and raw material costs.
The average prices of PepsiCo products jumped 5 per cent for the quarter ended Jun 15, while organic volume slipped 3 per cent.
Sales at the North America beverages segment – the company’s largest unit – accounted for about 30.3 per cent of fiscal 2023 total revenue. Frito-Lay North America, its second largest unit, contributed about 27 per cent.
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The company’s net revenue rose to US$22.5 billion in the quarter, from US$22.3 billion a year earlier. LSEG data showed that analysts had estimated a net revenue of US$22.6 billion.
Net income attributable to the company rose US$3.1 billion, or US$2.23 per share, in the latest quarter. This is compared to US$2.8 billion, or $1.99 per share, from the corresponding period a year earlier. REUTERS
