PepsiCo CFO Says More Price Hikes May Be Underway in Q1
David A. Grogan | CNBC
PepsiCo CFO Hugh Johnston expects prices for the company’s snacks and drinks to rise again early next year.
“I think we’ll probably see a few more price increases in the first quarter of next year as we deal with the fact that input costs are just higher,” Johnston said on CNBC’s “Squawk Box”. Tuesday. “It’s just the reality for us and for everyone.”
This summer and through the fall, the prices of Pepsi drinks have increased, while the prices of snacks are starting to climb now, according to Johnston. Other consumer packaged goods companies, like Procter & Gamble and Pepsi’s rival Coca-Cola, have also raised prices this year to offset the blow from rising costs, which are eating into profits.
Like all food and beverage giants, Pepsi buys the products and materials it needs months in advance. But these contracts do not help the company escape inflation.
“Futures buying can’t do much for us. What it does is buy us about six to nine months of space, so to speak,” Johnston said.
This leeway allows the business and retailers to ease consumers into higher prices, saving them from the shock of stickers.
During the third quarter, Pepsi recorded higher inflation-related costs for labor, raw materials and transportation, particularly for its Quaker Food North America business unit. The company’s net income fell 3% for the quarter, despite net income growth of 11.6%.
Pepsi shares rose about 1% in pre-market trading after the company beat third-quarter analyst estimates and raised its revenue forecast for the full year.