PepsiCo rides on price increases to lift annual forecasts

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[October 12, 2022]  (Reuters) -PepsiCo Inc raised its annual revenue and profit forecasts on Wednesday, powered largely by the multiple price increases the soda and snack giant had made to cushion the impact of rising costs.

Bottles of Pepsi are pictured at a grocery store in Pasadena, California, U.S., July 11, 2017. REUTERS/Mario Anzuoni/File Photo

The company's shares rose 2.3% in premarket trading as it also trounced third-quarter revenue estimates.

Consumers, wrestling with a relentless surge in inflation, are eating more at home than at restaurants as they cut back on discretionary spending. A trend that has benefited U.S. packaged food makers like PepsiCo that offer everything from snacks to sports drinks.

Global packaged food makers are also grappling with higher costs of many commodities and supply chain pressures that have been aggravated by the Russia-Ukraine conflict.

A near-duopoly in the carbonated drinks market with Coca-Cola has helped PepsiCo raise prices with little push back from consumers, while its strong market position in snacks has also buffered the company.

The price increases helped boost revenue across all its segments, especially its biggest two divisions of North America beverage and Frito-Lay.

The beverage business, which houses brands such as Mirinda, 7UP and Gatorade, posted a 1% increase in volume, signaling resilient demand from consumers.

The company said it expects 2022 organic revenue to rise 12%, compared to a prior forecast of a 10% increase. PepsiCo had raised its revenue expectations in April and July.

PepsiCo now expects fiscal 2022 core constant currency earnings per share of about $6.73, compared to its previous forecast of $6.63.

The company's net revenue rose about 9% to $21.97 billion in the third quarter ended Sept. 3, beating analysts' estimates of $20.84 billion, according to IBES data from Refinitiv.

(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Sriraj Kalluvila)

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