• Email Us: [email protected]
  • Contact Us: +1 718 874 1545
  • Skip to main content
  • Skip to primary sidebar

Medical Market Report

  • Home
  • All Reports
  • About Us
  • Contact Us

Consumer goods companies walk a tightrope as inflation surges

October 8, 2021 by David Barret Leave a Comment

October 8, 2021

By Uday Sampath Kumar

(Reuters) – Big global brands Pepsi and Levi Strauss told investors this week they offset inflation with price increases, but rising costs of everything from aluminum to cotton signal tighter times ahead for consumer goods companies.

Freight costs and raw material prices have surged this year across industries due to global supply chain disruptions, squeezing profit margins at companies looking to recover from the impact of the COVID-19 pandemic.

To cushion the blow, PepsiCo Inc and Levi Strauss & Co, among the first batch of consumer product companies to report quarterly earnings, have raised prices for jeans, snacks and sodas, helping results exceed expectations.

While those companies were able to pass along costs to consumers, higher prices will be a headwind until at least the end of the year with some industries likely facing pressure until the middle of 2022, analysts have said.

With government data showing inflation has started to dent consumer spending, companies must also balance the need to protect their margins with the risk that boosting prices will hit demand for their products.

Analysts at Credit Suisse characterized the breadth of inflation PepsiCo faced as “stunning”.

“We expect margin pressure to be the predominant theme through the rest of this earnings season,” they said. J.P.Morgan’s Andrea Teixeira said PepsiCo “is feeling and will continue to feel the impact of inflationary pressures and supply chain challenges.”

But Ramon Laguarta, PepsiCo’s chief executive officer, is confident even as the company faces higher packaging material costs and truck driver wages.

“Across the world, consumer seems to be looking at pricing a little bit differently than before,” Laguarta said in an analyst call, highlighting the strength of the company’s brands and innovations.

That sentiment was echoed by Slim Jims maker Conagra Brands Inc. Levi’s said previous price increases, which helped boost the jeans maker’s gross margins, would allow it to offset expected higher cotton prices next year.

However, some companies are feeling the pinch more than others.

Corona beer maker Constellation Brands said on Wednesday the benefits from price increases and a cost savings program are expected to be more than offset by higher prices for commodities including aluminum, diesel and wood.

PepsiCo keeping up with demand during the pandemic while also grabbing market share has given the company strong pricing power, where as Constellation, which struggled to keep up supplies has comparatively less capacity to raise prices, said Markus Hansen, Portfolio Manager at Vontobel Quality Growth, which holds stakes in both PepsiCo and Constellation.

“PepsiCo wasn’t shooting down the idea of price increases in the mid single-digit range – 4% or 5%. That’s a pretty powerful thing,” Hansen said, adding that for Constellation he was looking at a low single-digit range.

(Reporting by Uday Sampath and Praveen Paramasivam in Bengaluru; Editing by Anna Driver and Saumyadeb Chakrabarty)

Source Link Consumer goods companies walk a tightrope as inflation surges

David Barret
David Barret

Related posts:

  1. Republican Cheney named as vice chair of U.S. House panel investigating Jan. 6 attack
  2. Point raises $46.5 million for its premium debit card
  3. Onin is trying to fix event planning by combining calendar and chat
  4. S&P 500 on track for worst day in four months

Filed Under: News

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

  • Interstellar Comet 3I/ATLAS Is Losing Buckets Of Water Every Second – And It’s Got Cyanide
  • “A Historic Shift”: Renewables Generated More Power Than Coal Globally For First Time
  • The World’s Oldest Known Snake In Captivity Became A Mom At 62 – No Dad Required
  • Biggest Ocean Current On Earth Is Set To Shift, Spelling Huge Changes For Ecosystems
  • Why Are The Continents All Bunched Up On One Side Of The Planet?
  • Why Can’t We Reach Absolute Zero?
  • “We Were Onto Something”: Highest Resolution Radio Arc Shows The Lowest Mass Dark Object Yet
  • How Headsets Made For Cyclists Are Giving Hearing And Hope To Kids With Glue Ear
  • It Was Thought Only One Mammal On Earth Had Iridescent Fur – Turns Out There’s More
  • Knitters, Artists, And Bakers Unite! Creative Hobbies Can Help Your Brain Stay Young
  • The Biggest Millisecond Pulsar Glitch Recorded Represents An Astronomical Mystery
  • There Are Five Different Types Of Bad Sleeper. Which One Are You?
  • In A World First, Autonomous Underwater Robot Sets Off On Mission To Circumnavigate The Globe
  • First-Ever Living Recipient Of A Pig-To-Human Liver Transplant Survived For 171 Days
  • 190-Million-Year-Old “Sword Dragon Of Dorset” Likely The World’s Most Complete Pliensbachian Reptile
  • Acting CDC Director Calls For Splitting Up MMR Shots – But There’s A Reason We Don’t Do That
  • New Species Of Tiny Poison Dart Frog With Stripy Back And Spotty Legs Loves Bamboo
  • Not A Canine, Nor A Feline: Four Incredibly Cute Fossa Pups Have Been Born At A Zoo
  • The Most “Pristine Star” In The Universe May Have Been Identified – Researchers Link It To Elusive “Population III” Stars
  • 78-Million-Year-Old Crater Reveals Asteroid Impacts Can Create Long-Lasting Habitats For Microbial Life
  • Business
  • Health
  • News
  • Science
  • Technology
  • +1 718 874 1545
  • +91 78878 22626
  • [email protected]
Office Address
Prudour Pvt. Ltd. 420 Lexington Avenue Suite 300 New York City, NY 10170.

Powered by Prudour Network

Copyrights © 2025 · Medical Market Report. All Rights Reserved.

Go to mobile version