PepsiCo Inc. said on Thursday it will not further raise prices of its sodas and snacks after multiple rounds of price hikes last year that helped the beverage giant post fourth-quarter profit and revenue ahead of analysts’ estimates.
A near duopoly in the carbonated drinks market with Coca-Cola Co. helped PepsiCo raise prices over the last few quarters with little pushback from consumers as it battles higher freight, commodity, and labor costs, as well as the impact of a stronger dollar on international revenue.
“We have most of our price increases for the year already in place,” PepsiCo Chief Financial Officer Hugh Johnston told Reuters, adding that a big percentage of pricing in 2023 would just be a carry over of the actions taken last year.
While the company expects inflationary pressures to persist in 2023, it still sees consumer demand being resilient.
PepsiCo is in a “real sweet spot” in terms of consumers since they have enough money to buy themselves affordable treats, Johnston said.
The company’s shares rose 2 percent to $174.44 in premarket trading as the company also raised its annual dividend by 10 percent to $5.06 per share.
PepsiCo’s North America beverages unit, which houses brands such as Mirinda and 7UP, posted an organic revenue growth of 10 percent in the fourth quarter.
Average prices jumped 16 percent in the quarter, while organic volume slipped 2 percent.
“As we transition through COVID we see volumes and pricing as an important factor, but, believe company’s strong brand position ... (will) help during the inflationary period, like it navigated during the pandemic,” Markus Hansen, a portfolio manager at Vontobel Quality Growth, said.
The Frito-Lay maker however, forecast annual profit below estimates and said it expects some pushback on prices in the second half of the year.
On an adjusted basis, PepsiCo earned $1.67 per share in the fourth quarter, beating estimates of $1.65, according to Refinitiv data.
