PepsiCo Will Raise Prices to Offset Higher Costs, CFO Says
PepsiCo's CFO says the company will raise prices on some products to offset higher commodity and supply chain costs.
(Bloomberg) -- PepsiCo Inc. Chief Financial Officer Hugh Johnston said that higher prices will be the “No. 1” tool the beverage and snack maker will use to offset higher commodity, transportation and supply chain costs.
Speaking in an interview, Johnston said PepsiCo will also change the mix of products it sells in a bid to nudge shoppers toward more profitable items -- like variety packs of Lay’s chips instead of larger bags.
“There’s an opportunity for us to get some margin there,” he said. The maker of Mountain Dew and Doritos has also improved its ability to leverage demographic data across regions, allowing it to use its shelf space more efficiently, he added.
“In local grocery stores, we can get more sales per square foot,” he said. These tools “allow us to drive higher pricing and higher profitability.”
See also: International performance bolsters PepsiCo’s sales
PepsiCo on Tuesday reported third-quarter sales that beat analyst estimates while raising its full-year revenue forecast.
Johnston said that the company’s beverage business has been hampered by a shortage of certain supplies, such as aluminum cans used for soft drinks and plastic bottles for Gatorade sports drinks.
“We are not immune to it,” Johnston said. “It’s been a bit of a challenge.”
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