PepsiCo sales fizz despite price increases                  

Outlook raised for second time this year as volumes hold up well

PepsiCo raised its outlook for the second time this year, saying it expects revenue to grow 10% this year as consumer demand remains resilient.

The beverages maker, which also sells Fritos and Quaker Oats, had previously increased its revenue forecast in April. Profit and sales in the second quarter beat estimates, the company said. 

The new guidance reflects “the strength and resilience of our categories and consumer demand trends”, it said. 

As it’s one of the first of the US major industry players to report second-quarter data, investors are closely watching PepsiCo for insights into how shoppers are behaving as persistent inflation stretches their ability to absorb price increases.

The company reported sales of $20.2bn in the quarter. Unit volume increases weren’t as strong as those for revenue, indicating that some of the quarter’s gains came from price increases. 

Overall, prices were 12% higher across products during the quarter, according to Hugh Johnston, PepsiCo’s chief financial officer. 

Frito-Lay North America’s volume was down 2%. Those results were weighed down by a temporary production glitch with the company’s hummus product, Sabra. Also, Quaker Foods North America was up 2%, and PepsiCo Beverages North America was down 1%.

“Inflation was higher than 12% over the quarter, so we did need to fix some pricing,” Mr Johnston said. Pricing did affect volumes, he said, “but the volumes have held up well”. 

Bloomberg