PepsiCo Navigates Consumer Price Sensitivity Amid Economic Strain

PepsiCo CEO Ramon Laguarta discussed the increase in price sensitivity across all U.S. income groups due to inflation, affecting both consumer demand and corporate strategies. The company struggled with revenue targets but managed to improve margins through price hikes, while investing in efficiencies and cost reductions to navigate the economic challenges.

PepsiCo CEO Ramon Laguarta highlighted a significant increase in price sensitivity among U.S. income groups, noting that this shift is not limited to low-income consumers alone. The maker of Diet Pepsi and Tostitos tortilla chips faced revenue shortfalls in its second quarter amid rising prices and squeezed wages.

To offset unprecedented cost inflation, PepsiCo has implemented price hikes, raising prices by 5% in the most recent quarter ended June 15. Despite some costs, like agricultural commodities, continuing to remain high, other costs, notably U.S. consumer prices, have begun to fall.

Laguarta pointed out that both lower and higher-income consumers are adjusting their spending habits, with the latter cutting back on dining out and opting for more affordable options. PepsiCo is focusing on cost-cutting and investment in its Frito-Lay business to maintain consumer interest while strategizing for future growth.

(With inputs from agencies.)