PepsiCo kept raising prices—now demand is down

PepsiCo got a bump to fourth-quarter profits thanks in part to lower charges and continued price hikes, but higher prices have weakened consumer demand for the company’s snacks and drinks.

The New York company said Friday that it expects organic revenue growth of at least 4% this year, less than half the 9.5% growth that PepsiCo booked in 2023.

Shares dropped 3% at the opening bell even as the company announced a 7% boost to its annual dividend and said that it would buy back about $1 billion of its shares.

For the three months ended December 30, PepsiCo earned $1.3 billion, or 94 cents per share. That compares with $518 million, or 37 cents per share, a year earlier.

Excluding an impairment charge and other items, earnings were $1.78 per share. The performance topped the $1.72 per share analysts polled by Zacks Investment Research expected.

Revenue slipped to $27.86 billion from $28 billion, and it was a rare miss for the company. Wall Street had projected revenue of $28.24 billion.

Pepsi has wrestled with higher prices and how to pass those costs along, raising prices by double-digit percentages for several quarters.

Global supermarket chain Carrefour said last month that it will stop selling PepsiCo products in its stores in France, Belgium, Spain, and Italy due to price increases for popular items like Lay’s potato chips, Quaker Oats, Lipton Iced Tea, and its namesake soda.

PepsiCo said at the time that it would continue to engage in good faith with Carrefour to try to ensure that its products remained available.

Its profits are up, though higher prices have dragged down sales as people trade down to cheaper brands. PepsiCo has been shrinking package sizes of some products in that environment.

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