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· Posted on
February 21, 2024

Boss moves from PepsiCo as it beats earnings expectations despite increasing prices

Pepsi's long been seen as the less-cool younger bro of Coke... but it still has a huge 26% market share of carbonated soft drinks in the US.

What's the key learning?

  • Despite product price hikes and global supply chain issues, PepsiCo's net sales rose by a whopping 11.6% to US$20.19 billion in 2021
  • Generally, when a company increases its prices, it causes customers to buy less product (it's called price elasticity)
  • But, Pepsi's strong revenue shows that its consumers are just really loyal - and are willing to buy its products no matter what (aka price inelasticity).

Background: PepsiCo is the fizzy and salty goods company behind products like Doritos, Smith's Chips, Mountain Dew and of course, Pepsi and Pepsi Max.

What happened: Pepsi's long been seen as the less-cool younger bro of Coke...but it still has a huge market share of carbonated soft drinks. We're talkin' nearly 26% in the US. And the whole company is worth a whopping US$208 billion.

What else: Now, PepsiCo's revenue has smashed analysts' expectations despite global supply chain issues and product price hikes. The company's net sales rose a whopping 11.6% to US$20.19 billion.

So what's the key learning?

💡Generally, when a company increases its prices, it causes customers to buy less product (it's called price elasticity). So, brands try to hide the price increase...Remember when Cadbury cut its choccie blocks by a fifth, and only reduced prices by 20 cents?

💡Other companies like Pepsi are attacking the issue straight on with flat out price hikes.

💡And, although it seems like Pepsi's wearing the Survivor immunity necklace...its customers are just really loyal. They'll buy the products no matter what (aka price inelastic!).

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