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Jack Otter and the ‘Barron’s Roundtable’ panelists discuss the reasons that Pepsi’s stock is being affected.
PepsiCo says it is boosting the volume of some of its packages of chips, after being accused last year of “shrinkflation,” or reducing the size of products without lowering the price.
In the company’s earnings call last week, PepsiCo CEO Ramon Laguarta said the food and beverage giant would be offering bonus packs of Tostitos containing 20% more chips, and will also be throwing two or three more bags of Doritos into multipacks as a way to add value for consumers.
PepsiCo said it will be adding more volume to some chip bags to add value for consumers. (Jeffrey Greenberg/Universal Images Group via Getty Images / Getty Images)
The move comes after Pepsi reported a surprise drop in revenue in the third quarter and cut its annual forecast as consumers in North America limit their spending on sodas and savory snacks, while opting for cheaper private-label brands.
‘SHRINKFLATION’ DUPES CUSTOMERS AS COMPANIES SEEK PROFITS DURING INFLATION SPIKE
“The cumulative impacts of inflationary pressures and higher borrowing costs over the last few years have continued to impact consumer budgets and spending patterns,” Laguarta said.
PepsiCo Lays brand chips are seen for sale at a Dollar General department store in Simpsonville, Kentucky, on Aug. 12, 2021. (Luke Sharrett/Bloomberg via Getty Images / Getty Images)
Pepsi, which owns several snack brands including Frito-Lay, was called out last year by French supermarket chain Carrefour for cutting the volume of some products while raising prices.
INFLATION LEADS TO SHRINKFLATION
Carrefour said a bottle of sugar-free peach-flavored Lipton Ice Tea, produced by PepsiCo, shrank from 1.5 liters to 1.25 liters. Meanwhile, there was a 40% increase in the price per liter.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| PEP | PEPSICO INC. | 174.48 | -1.42 |
-0.81% |
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Carrefour added price warnings on several food products in an effort to pressure manufacturers to reduce their prices.
FOX Business reached out to PepsiCo for comment.
FOX Business’ Daniella Genovese and Reuters contributed to this report.
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