What’s Going On Here?PepsiCo reported better-than-expected earnings on Tuesday, as the US food and drinks giant starts to cater to slightly more… expensive tastes. What Does This Mean?Supply shortages have been pushing up costs for companies across the board, but Pepsi’s in a stronger position than most: it sells products that customers tend to buy no matter what, which means it can bump up prices without sacrificing sales. And that’s exactly what happened last quarter: Pepsi’s profit fell 3% compared to the same time last year, sure, but its organic revenue – that is, excluding the effects of acquisitions and currency swings – grew 9%. Emboldened, the company said it’s planning to raise prices even more in an effort to close that profit gap, and its raised its revenue outlook for the rest of the year too. Why Should I Care?For markets: Green is the new brown.
Pepsi’s stock is only up 4% this year versus the US stock market’s 16%, but the company has a plan to fix that: it’s been trying to endear itself to an increasingly eco-conscious customer and investor base (tweet this). That became clear last month, when it said it’d be releasing a new range of healthy snacks and drinks in collaboration with Beyond Meat by 2022. It then doubled down on those new sustainable stylings, announcing that it would be committing to a new program – “Pep+” – that includes a raft of ambitious sustainability targets.
Zooming out: Beer’s lost its taste.
It’s not just Pepsi that’s looking to change with the times: AB InBev – the world’s biggest brewer – said on Monday that it’s thinking of selling off some of the German beer brands it’s owned for decades. It apparently wants to focus more on wines and spirits, which stands to reason: more than 60% of growth in the alcohol industry is being driven by products other than beer. | 