Consumers are still showing signs of being highly sensitive to inflationary pressures and are shopping around to maximize their budgets, according to PepsiCo Inc. Chief Executive Ramon Laguarta.
“ ‘We’re seeing consumers shopping in more stores than before. They’re looking for better deals. They’re starting to look for optimization. They are going to channels that have better perceived value.’”
Laguarta told analysts on the company’s second-quarter earnings call on Tuesday that consumers are buying more in dollar stores or buying more in bulk or at wholesale clubs.
“So every segment of the consumer is making adjustments,” he said, according to a FactSet transcript.
Still, PepsiCo
PEP,
saw better elasticities in the three-month period, he said, referring to consumers’ sensitivity and response to higher prices.
Like many consumer companies, the snacks and beverages giant has been raising prices to combat its own higher costs in the current inflationary period. But, “we’ve been able to raise prices and consumers stay within our brands,’ he said.
See: U.S. inflation slows again, CPI shows, as Fed weighs another rate hike
One supportive factor is low unemployment, said Laguarta. Unemployment is currently low in developed and developing markets and is trending at a record low in Mexico and certain Asian markets, he said.
“So we’re seeing overall very good consumer behavior, especially when it refers to our categories, and that’s why we raised guidance on our top line and because of the first factor we raised guidance on the bottom line as well,” he said.
See also: ‘Greedflation’ is replacing inflation as companies raise prices for bigger profits, report finds
PepsiCo earlier posted better-than-expected earnings for the latest quarter and raised its fiscal 2023 guidance.
Some of PepsiCo’s more popular brands, including Lay’s, Doritos, Cheetos, and Ruffles, generated double-digit net revenue growth, along with smaller, emerging brands aimed at consumers seeking healthier choices, such as PopCorners, SunChips, Bare, and Off The Eaten Path, said the company.
The stock was up about 1% Thursday and has gained 2.4% in the year to date, while the S&P 500
SPX,
has gained 16%.
For more, see: PepsiCo’s stock gains after beating estimates in latest quarter and raising guidance again
This story originally appeared on Marketwatch
