PepsiCo remains open to increasing prices as it raises revenue outlook

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PepsiCo has raised its revenue outlook for 2022. This comes as inflation increased prices and consumers are forking out more for Doritos and Gatorade. Quoting PepsiCo's CFO, Hugh Johnston, CNBC said that just like everyone else, the company is facing inflation which it thinks will carry on for a while. However, Johnston explained that it is "taking enough pricing to be able to manage the inflation". PepsiCo's main focus is on how it drives costs out of the business, he added.

Meanwhile, the Financial Times reported that PepsiCo predicts inflation will remain elevated for the rest of 2022. The company also remains open to further increasing prices after witnessing limited pushback from consumers thus far. Johnston told FT that "further actions to raise product prices or cut costs may be needed".

The company increased the prices of its products by 12% overall in the three months until mid-June. According to Johnston, the increase was "below the inflation rate it experienced", FT reported. This was because the company was able to reduce internal costs and rely on its digital investments to manage inventory more precisely at individual stores.

Consumers' willingness to accept the price increases helped PepsiCo as the company reported a 5.2% year-on-year jump in net revenue to over US$20.2 billion. According to FT, this beat Wall Street's forecast of US$19.5 billion. The company currently predicts revenue to grow by 10% this year on an organic basis, FT said.

Net revenue for Asia Pacific, Australia and New Zealand and the China region grew 3% during the second quarter while Africa, the Middle Eeast and South Asia grew 6%. Frito-Lay North America and Quaker Foods North America reported a 14% and 17% year-on-year increase in revenue respectively while Latin America had a 23% revenue growth. Revenue for Europe and PepsiCo Beverages North America, however, dipped 8% and 1% respectively.

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