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PepsiCo warns of another price increase as supply disruptions linger

Stock MarketsOct 05, 2021 12:57PM ET
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© Reuters. FILE PHOTO: Bottles of Pepsi are pictured at a grocery store in Pasadena, California, U.S., July 11, 2017. REUTERS/Mario Anzuoni

By Uday Sampath Kumar

(Reuters) -PepsiCo Inc said on Tuesday it would likely raise prices again early next year, as it looks to overcome ever increasing supply-chain challenges that include everything from a shortage of Gatorade bottles to a lack of truck drivers.

Chief Financial Officer Hugh Johnston told Reuters that PepsiCo (NASDAQ:PEP) had to "scramble" to overcome a shortage of cans and Gatorade bottles in the last few months as demand for its beverages jumped at restaurants and theaters following the lifting of pandemic-induced restrictions.

PepsiCo has already raised prices of its sodas and snacks in recent weeks, echoing the strategy of broader packaged foods industry as rising raw material prices pinch profit margins.

"I do expect there will probably be some price increases in the first quarter of next year as well, as we fully absorb and lock down the impact of commodity inflation," Johnston said, adding that he expects most supply-chain disruptions to moderate by the end of 2021.

PepsiCo's UK business has also been hit by a shortage of truck drivers in post-Brexit Britain due to immigration rules and a loss of about a year of driver testing and training.

However, Johnston said he does not expect a shortage of PepsiCo products in supermarkets, saying the company should be in better shape by the end of the fourth quarter.

The company said it was expecting fiscal 2021 organic revenue to rise about 8%, compared with its prior forecast of a 6% increase. https://

PepsiCo's third-quarter organic revenue rose 9%, 5-percentage points of which came from selling higher-priced products. Costs were up over 10%, driven by higher expenditure on distribution and marketing.

Net revenue rose 11.6% to $20.19 billion in the quarter ended Sept. 4, above analysts' estimates of $19.39 billion, according to IBES data from Refinitiv.

PepsiCo shares rose marginally in premarket trading.

PepsiCo warns of another price increase as supply disruptions linger
 

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Comments (3)
Jacob Jordan
Jacob Jordan Oct 05, 2021 10:06AM ET
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they don't teach self control anymore.
Vlad Lozovskiy
Vlad Lozovskiy Oct 05, 2021 9:52AM ET
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Well that is a tragedy!
Hunt Richardson
Hunt Richardson Oct 05, 2021 7:09AM ET
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it never ceases to amaze me how many people drink sodas with a lot of high fructose corn syrup like this
Josh Davis
Josh Davis Oct 05, 2021 7:09AM ET
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Cut out cokes and meat from your groceries and watch how much you save. Its nuts man.
Jacob Jordan
Jacob Jordan Oct 05, 2021 7:09AM ET
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they don't teach self control anymore.
 
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