Expect To Pay More For PepsiCo Products Soon, Here’s Why

Expect increased prices on your next grocery trip. PepsiCo, the soft drink giant, has announced that they will be raising prices on both their famed sodas and snacks in the coming months. Prices on the products have already been steadily rising since the summer on sodas, but now the snack prices are experiencing a price hike as well. Here’s why. 

Rising Prices Hit The Grocery Store Hard

A lot of companies and businesses have been affected by the ongoing coronavirus pandemic in a variety of ways. There are, of course, the measures many have had to implement to encourage social distancing and mask-wearing. There’s also been a worker shortage that many businesses are still trying to rebound from. Now, product prices are on the rise thanks to higher costs on the production side. 

PepsiCo CFO Hugh Johnston appeared on CNBC’s Squawk Box on Tuesday and admitted that consumers should expect higher prices moving in to the first quarter of next year “as we deal with the fact that input costs are just higher.” He added, “That’s just the reality for us and everybody else.”

All this summer, and as we transition into fall, the prices of Pepsi’s drinks have continued to steadily rise to offset increased production costs, but now those price increases have begun affecting the company’s snack line as well, Johnston explained.

Not The Only Company Raising Prices

PepsiCo isn’t the only company fighting rising costs with higher prices at the store. Both Procter & Gamble as well as Pepsi’s direct rival Coca-Cola have also raised prices this year. 

Luckily, companies like PepsiCo engage in what’s called “forward buying” where they purchase needed materials up to six months in advance. This allows these companies, as well as their retail counterparts, a bit of maneuvering room to ease consumers into accepting higher prices without experiencing a shock while roaming the shelves.

“The forward buying can only do so much for us,” Johnston warned. “What it does is buy us about six to nine months of room, so to speak.” 

Changes in consumer habits thanks to the novel coronavirus may turn out to be a boon for the company, however, Pepsi’s CEO Ramon Laguarta said during a company conference call.

Changes In Consumer Behavior Could Be A Boon

“There could be also some behaviors as consumers are shopping faster in-store, and they might be paying less attention to pricing as a decision factor, and there might be even more relevance to the brands,” Laguarta said.

Keep an eye out for changing prices as the year ends, and stay alert during the new year as well if you’d like to keep watch on your wallet.

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