PepsiCo near doubles its expected full year earnings despite strong inflationary effects, says GlobalData – Retail Times



Following today’s release of PepsiCo’s figures for Q2 2021/22; Amira Freyer-Elgendy, consumer analyst at GlobalData, a leading data and analytics company, offers her view: “PepsiCo has adjusted its full year organic revenue growth forecast for the second time this year but shrinking margins and the company’s reliance on markets heavily hit by inflation, such as North America will be a major hurdle to overcome. PepsiCo lifted its organic revenue growth forecast from 6% to 8%, and now to 10%, outdoing current full year projections set by rivals, with Coca-Cola’s latest forecast for organic revenue sitting at 7-8%, and Nestlé expecting a 5% rise.  PepsiCo is trying to establish itself as a strong performer and a solid player, but the remainder of the financial year will be tougher considering downtrading trends in shoppers.

“Maintaining shopper loyalty is key in the coming months, as price increases are expected to push customers to look for alternatives. Shrinkflation – offering shoppers the same price but in smaller packs – has been the go-to strategy for PepsiCo so far.  However, as inflation rises, shoppers will become more sensitive to money spent by volume and may cut back on consuming PepsiCo’s core product categories (savoury snacks and beverages). North America – the biggest region in terms of sales for the company is experiencing high inflation (c7.5% in 2022 based on GlobalData’s Macroeconomic Database)* and shoppers opting for private label, cheaper options or buying far less from the brand, are a potential risk. GlobalData’s 2022 consumer survey results show that there has been a significant increase in purchases from private label for savoury snacks in the US from Q1 (25%) to Q2 (30%).  Volume and value trends in PepsiCo’s recent results highlight the inflationary effects, especially in America and Europe.

“Europe accounts for 14.8% of its overall net revenue and PepsiCo Beverages North America accounts for the biggest share of its net revenue at 30.3% but both regions dipped into negative volumes this quarter. Quaker Foods North America, meanwhile, was the only North American sector that saw any volume growth this quarter, due to consumers investing in food staples, such as cereals and rice.

“PepsiCo has had a strong set of results across the last two quarters, but inflationary pressures will shake up its loyal customer base, with volume growth set to soften in future. PepsiCo should focus on communicating the value for money and quality in its product range while ensuring its entry priced options are appealing for consumers looking to trade down.”


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Following today’s release of PepsiCo’s figures for Q2 2021/22; Amira Freyer-Elgendy, consumer analyst at GlobalData, a leading data and analytics company, offers her view: “PepsiCo has adjusted its full year organic revenue growth forecast for the second time this year but shrinking margins and the company’s reliance on markets heavily hit by inflation,…