Tags: Pepsi | Stagflation | Pricing

Pepsi CFO Says Stagflation Making Pricing Hard

Wednesday, 07 Sep 2011 11:14 AM

Developed markets like the United States are in a "stagflationary environment" that is creating hardships for consumer products makers such as PepsiCo Inc., a senior company executive said Wednesday.

Stagflation, or high inflation coupled with low economic growth, and a "stressed consumer" are making it hard for companies to raise prices as much as they must to offset rising commodity costs, PepsiCo Chief Financial Officer Hugh Johnston said at a conference hosted by Barclays.

Johnston's presentation was simultaneously broadcast over the Internet.

"This stagflation has made pricing a tricky balancing act," Johnston said.

Brands that raise prices risk turning off budget-conscious consumers, who often switch to cheaper brands.

The company, whose beverages include Pepsi-Cola, Gatorade and Tropicana juices, said price increases went into effect after July 4. Gatorade will see price increases in the fourth quarter, Johnston said.

Johnston also said he does not see a need for PepsiCo, which also makes Frito-Lay snacks and Quaker oatmeal, to do any large-scale acquisitions in the future, saying the product portfolio was "where it needs to be".

PepsiCo shares were up 25 cents, or 0.4 percent, at $62.70 on the New York Stock Exchange.

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Developed markets like the United States are in a stagflationary environment that is creating hardships for consumer products makers such as PepsiCo Inc., a senior company executive said Wednesday. Stagflation, or high inflation coupled with low economic growth, and a ...
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