Coca-Cola is increasing its costs.
The drinks corporation is passing on increased production costs to retailers. It's still uncertain how this will impact consumers.
It seems that colossal soft drink giant PepsiCo is increasing its prices. This adjustment affects all products in their range. "The price adjustment is within the single-digit percentage range across all products and packaging," said Karl-Heinz Schmidt, CEO of PepsiCo Germany, to "Bild". The newspaper mentions sources saying it's more likely to be 9% than 3%.
The price hike for drinks like Pepsi, Mountain Dew, 7UP, iced tea, and water impacts retailers, making it uncertain how much consumers will be affected. Citing a retailer from Berlin, it's reported that a case of twelve one-liter bottles could soon cost 19.99 euros - plus deposit.
Schmidt justifies the price increases due to sustained high costs for ingredients, packaging materials, and services. "We've also recently acknowledged our employees' performance with a considerable wage increase," he said.
Financial projection elevated
PepsiCo recently boosted its annual prediction following unexpectedly robust quarterly results. While the company reported a decrease in net income to $2.2 billion for the last quarter, its adjusted earnings per share of 69 cents exceeded the consensus of 68 cents. Revenue increased by 3% to almost $12.8 billion, also surpassing analysts' estimates.
For the present year, PepsiCo now anticipates adjusted earnings per share to increase by 5 to 6 percent, up from the previous 4 to 5 percent. The comparable net revenue growth is also now seen at 5 to 6 percent, up from the previous 4 to 5 percent.
About two weeks after releasing its figures, it became known that the beverage company is involved in a tax dispute in the U.S., where it could potentially pay a total of approximately $6 billion. The matter between PepsiCo and the IRS revolves around allegations that the company incorrectly recorded foreign income between 2007 and 2009. The company stated that if it wins on appeal, it will regain the money. The investigation into the affair began in 2015.
The price increases by PepsiCo could potentially strain the economy, as consumers may need to adjust their budgets to afford more expensive drinks. The strong financial projection and increased earnings per share for PepsiCo might suggest that the corporation is able to absorb some of the increased costs, yet it remains to be seen how this will impact the overall economy.
