Thursday, April 28, 2011

Pepsi Plans Additional Price Increases

PepsiCo Inc. said it plans more price increases on its products this summer, but not enough to offset rising commodity costs amid a still-fragile consumer recovery.

The renewed price push comes after PepsiCo reported North American sales volume of its snacks and beverages rose 2% in the first quarter from a year earlier, despite a continued downturn at its smaller Quaker foods unit.

"We're trying to thread the needle and see how much pricing we can take,'' Indra Nooyi, chairman and chief executive, told analysts in a conference call Thursday.

PepsiCo said its "price mix" for North American beverages rose about two percentage points in the first three months of 2011 – about half from higher sticker prices and the rest from a shifting mix of products, package sizes and retail channels.

But management acknowledged it won't be able to fully pass higher input costs such as plastic for bottles or corn for chips through to consumers in the U.S. and elsewhere. It estimates the company's global commodity costs will increase by $1.4 billion to $1.6 billion this year – or as much as 9% of its annual $18 billion commodity cost base.

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1 comment:

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