Pepsi price increases fuel 10% jump in quarter

PepsiCo reported betterthan-expected sales in the fourth quarter after hiking prices for its drinks and snacks, but it warned that consumers may be less willing to accept those increases as this year progresses.

Revenue rose more than 10% to $28 billion. That was better than the $26.8 billion Wall Street had forecast, according to analysts polled by FactSet.

Pepsi raised prices 16% in the October-December period and 14% overall in 2022 as it battled double-digit percentage cost increases for ingredients like cooking oil, potatoes and seasonings. The price increases boosted results; Frito-Lay snacks and Quaker products booked double-digit revenue gains in North America, even though sales volumes were down 1% and 3%, respectively.

In Europe, where Pepsi hiked prices by 20%, the company said costs for packaging materials, cooking oil and other commodities surged 141 percentage points. Revenue and sales volumes both fell in that market. Revenue and sales volumes rose elsewhere, including Asia and Latin

America.

Pepsi says consumers have been resilient in the face of higher prices, and continue to gravitate toward familiar brands like Doritos and Cheetos.

Newer drinks, like the recently reformulated Pepsi Zero Sugar, are also pulling in customers. Pepsi Zero Sugar sales volumes jumped 26% in the fourth quarter, Pepsi Vice Chairman and Chief Financial

Officer Hugh Johnston said Thursday in a conference call with investors.

But Johnston said the company wouldn’t be surprised to see a mild recession in the U.S. and other developed markets in the second half of this year.

Pepsi’s net income fell 60% to $535 million, largely due to a $1.5 billion impairment charge for its SodaStream brand and other assets.