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PepsiCo Lifts Sales Forecast On Firm Demand For Pricier Snacks, Soft Drinks

PepsiCo Inc raised its full-year revenue forecast on Tuesday, as consumers bought more soft drinks and snacks even in the face of rising prices.

The company's shares rose about 1% to $171.80 in premarket trading.

Packaged food makers have so far felt little impact of decades-high inflation on consumer demand, especially in the United States, as people prioritise spending on eating at home rather than at restaurants.

Emerging Signs 

However, signs are starting to emerge that a ceiling on price increases has been reached with some grocery stores now pushing back on price hikes from food companies.

Earlier this year, PepsiCo's snack brands briefly disappeared from shelves at Canadian grocer Loblaw Cos Ltd after the two companies sparred over price increases.

However, that had little effect on PepsiCo's overall net revenue, which rose 5.2% to $20.23 billion in the second quarter ended 11 June, beating analysts' estimates of $19.51 billion, according to IBES data from Refinitiv.

Organic Revenue

Organic revenue at the company's Frito-Lay North America unit rose 14% in the reported quarter, with its Doritos, Cheetos and Ruffles snack brands each delivering double-digit net revenue growth.

Organic revenue at PepsiCo's North America beverage unit rose 9%.

On an adjusted basis, the company earned $1.86 per share, compared with estimates of $1.74 per share.

PepsiCo said it expects fiscal 2022 organic revenue to rise 10%, compared to a previous forecast of an 8% increase.

The beverage giant also maintained its full-year earnings growth forecast of 8% even as surging commodity and freight costs continue to bite into margins.

Read More: PepsiCo Raises Revenue Forecast On Boost From Price Increases

News by Reuters, edited by Checkout. For more A-brand stories, click here. Click subscribe to sign up for the Checkout print edition.

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