The US and other developed markets have moved into "stagflationary" mode over the past six months, and the lack of growth has created a pricing dilemma for CPG companies, Hugh Johnston, PepsiCo's CFO, told attendees at a Barclays Capital investor conference."While our brands are solid and our company is highly productive, this stagflation has made pricing a tricky balancing act," Johnston said. "Price elasticities have become steeper at the same time that [price increases] are required to cover higher input costs, and this is squeezing performance across food and beverage."
Given this reality, PepsiCo is focusing on pricing strategies, as well as supporting its brands with marketing to clearly define and communicate their distinct positioning to consumers and driving innovation, Johnston said.
PepsiCo continues to adjust its pricing architecture to "meet the needs of the widening gap between value, middle and premium consumers" and "be responsive to generally higher price sensitivity across all consumers," he said.
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