Pepsi price hikes fuel 10% jump in the fourth-quarter sales

Feb 9, 2023, 4:42 AM | Updated: 2:02 pm

PepsiCo reported better-than-expected sales in the fourth quarter after hiking prices for its drinks and snacks, but it warned that consumers may be less willing to accept those increases as this year progresses.

Revenue rose more than 10% to $28 billion. That was better than the $26.8 billion Wall Street had forecast, according to analysts polled by FactSet.

Pepsi raised prices 16% in the October-December period __ and 14% overall in 2022 __ as it battled double-digit percentage cost increases for ingredients like cooking oil, potatoes and seasonings. The price increases boosted results; Frito-Lay snacks and Quaker products booked double-digit revenue gains in North America even though sales volumes were down 1% and 3%, respectively.

In Europe, where Pepsi hiked prices by 20%, the company said costs for packaging materials, cooking oil and other commodities surged 141 percentage points. Revenue and sales volumes both fell in that market. Revenue and sales volumes rose elsewhere, including Asia and Latin America.

Pepsi says consumers have been resilient so far in the face of higher prices, and continue to gravitate toward familiar brands like Doritos and Cheetos. Newer drinks, like the recently reformulated Pepsi Zero Sugar, are also pulling in customers. Pepsi Zero Sugar sales volumes jumped 26% in the fourth quarter, Pepsi Vice Chairman and Chief Financial Officer Hugh Johnston said Thursday in a conference call with investors.

But Johnston said the company wouldn’t be surprised to see a mild recession in the U.S. and other developed markets in the second half of this year.

“Right now the consumer is still quite good,” he said. “But we also have to plan for multiple scenarios.”

Pepsi’s net income fell 60% to $535 million, largely due to a $1.5 billion impairment charge for its SodaStream brand and other assets.

Pepsi said SodaStream, a $130 machine that lets users make their own carbonated drinks, is a discretionary purchase that has struggled in the current economic climate, particularly in Europe. Pepsi Chairman and CEO Ramon Laguarta said the company reassessed the value of the brand in the fourth quarter, but continues to think SodaStream has great potential.

Without one-time items, Pepsi earned $1.67 per share in the October-December period, beating analysts’ forecast of $1.65.

The Purchase, New York, company expects to deliver organic revenue growth of 6% this year, a slower pace from its full-year organic growth of 14.4% in 2022. It also plans $1 billion in share repurchases.

The company said it expects full-year adjusted earnings of $7.20 per share, up 6% from 2022. That came in lower than Wall Street’s forecast of $7.27 per share, according to FactSet.

Pepsi also said it would buy back about $1 billion worth of its own shares and raised its annual dividend by 10%.

Pepsi shares rose nearly 2% in morning trading.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


This photo provided by Robert Wilkes, owner of a house boat management company, shows smoke rising ...

Associated Press

Houseboats catch fire while docked at Wahweap Marina on Lake Powell

More than half a dozen house boats momentarily caught fire at a popular boating destination on the Utah-Arizona line on Friday.

3 days ago

File - Women work in a restaurant kitchen in Chicago, Thursday, March 23, 2023. On Friday, the U.S....

Associated Press

US hiring, unemployment jump in May and what that says about the economy

The nation’s employers stepped up their hiring in May, adding a robust 339,000 jobs, well above expectations.

3 days ago

(Pixabay Photo)...

Associated Press

Oath Keeper from Arizona sentenced for role in Jan. 6 riot at US Capitol

Edward Vallejo, a U.S. Army veteran from Phoenix, oversaw a “Quick Reaction Force” at a Virginia hotel that was prepared to deploy an arsenal of weapons into Washington if needed, authorities say.

4 days ago

FILE - U.S. Border Patrol Chief Raul Ortiz listens during a news conference, Jan. 5, 2023, in Washi...

Associated Press

US Border Patrol chief is retiring after seeing through end of Title 42 immigration restrictions

The head of the U.S. Border Patrol announced Tuesday that he was retiring, after seeing through a major policy shift that seeks to clamp down on illegal crossings at the U.S.-Mexico border following the end of Title 42 pandemic restrictions.

5 days ago

FILE - President Joe Biden talks with House Speaker Kevin McCarthy of Calif., on the House steps as...

Associated Press

House OKs debt ceiling bill to avoid default, sends Biden-McCarthy deal to Senate

The House approved a debt ceiling and budget cuts package late Wednesday, as President Joe Biden and Speaker Kevin McCarthy assembled a bipartisan coalition of centrist Democrats and Republicans against fierce conservative blowback and progressive dissent.

5 days ago

Sean Bickings (Family Photo via city of Tempe)...

Associated Press

Family of man who drowned last year in Tempe Town Lake files wrongful death lawsuit

The family of a man who drowned in Tempe Town Lake a year ago filed a wrongful death lawsuit against the city Wednesday, noting that its police department doesn't have a policy requiring officers to go into the water to save someone.

5 days ago

Sponsored Articles


Desert Institute for Spine Care

Spinal fusion surgery has come a long way, despite misconceptions

As Dr. Justin Field of the Desert Institute for Spine Care explained, “we've come a long way over the last couple of decades.”



Why drug-free weight loss still matters

Wanting to lose weight is a common goal for many people as they progress throughout life, but choosing between a holistic approach or to take medicine can be a tough decision.


OCD & Anxiety Treatment Center

How to identify the symptoms of 3 common anxiety disorders

Living with an anxiety disorder can be debilitating and cause significant stress for those who suffer from the condition.

Pepsi price hikes fuel 10% jump in the fourth-quarter sales