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14 October 2022
PepsiCo stays the course on marketing despite downturn
Carbonated soft drinksMarketing in a recession
As PepsiCo, a leader in the FMCG industry, navigates a challenging inflationary environment, the company is staying the course on advertising and marketing investment to bolster its commercial plans.
“The environment clearly is still very inflationary with a lot of supply chain challenges across the industry, and everybody [is] trying to have responsible behaviours to maximise the value of brands,” said Ramon Laguarta, Chairman & CEO of PepsiCo, on the company’s recent Q3 2022 earnings call.
“Our philosophy is the same. We continue to invest in advertising and marketing, and make sure that we have very strong innovation and very strong commercial plans,” he added.
Pushing forward on pricing
PepsiCo has pushed forward on price increases this year as a result of the inflationary environment, but has not lost the customer in the process.
“Europe has been impacted more than other parts of the world on cost. Therefore, we've had to lean into revenue management - probably stronger than other regions in the business," Laguarta explained.
“We've had a good summer, which tends to drive more impulse sales and those channels have higher price per liter or price per kilo, so that is reflected in the pricing in Q3,” the CEO added.
Strong brands can accommodate higher prices
Laguarta asserted that these positive outcomes on pricing reflect the strength of its brands, despite the challenging economic environment.
“The truth is that the investments we've made in the brands in the last few years are paying off, in the sense that our brands are being stretched to higher price points, and consumers are following us in Europe and in other parts of the world,” he said.
Laguarta's belief is that "affordable treats and small moments of pleasure" are still being sought by consumers, with PepsiCo inhabiting and "playing" in that space.