Inflation has been the talk of the day almost every day, how it’s affecting housing, groceries, and fuel prices, but what about stuff like soda and snacks?

The rising cost of basic materials has contributed to PepsiCo’s woes in 2022, as it has for practically every other consumer goods company.

PepsiCo will not win any popularity contests by passing those higher commodity costs on to consumers. On the other hand, investors may have understood PepsiCo’s decision to raise product prices, and this strategy may have saved it from a disappointing Q2.

Spill The Soda (Tea)

Despite the odds, PepsiCo posted gains in revenue and profits. PepsiCo’s core non-GAAP earnings per share in Q2 2022 grew by 8.1% year-on-year to $1.86, beating Wall Street’s consensus estimate of $1.74. Revenue rose 5.2% to $20.23 million, beating analysts’ estimates of $19.51 billion.

PepsiCo’s quarterly organic sales increased by 13%, perhaps the most encouraging of all. In the outlook for the entire year, the snack specialist raised its organic revenue growth forecast from 8% to 10% while maintaining an 8% growth forecast for its core constant currency earnings per share.

While there is no denying the fact that inflation is surging, PepsiCo’s second quarter in 2022 shows that it remains a junk-food dynamo despite it.

The quarter’s results were attributed to PepsiCo’s “highly dedicated employees” and its “strength and resilience” of product categories, according to Chairman and CEO Ramon Laguarta. A second contributing factor was PepsiCo’s 12% price increase in Q2, and CFO Hugh Johnston said this was due to inflation “well into the teens.”

Should I go for a cold soda?

PepsiCo’s quarterly performance did not impress investors, as shares were essentially flat on earnings day. Possibly they are waiting to see just how long customers will put up with substantially higher food and beverage prices before they reduce their snack-food consumption.

Johnston has indicated that higher consumer prices are likely this year, saying that further price increases (along with cost-cutting measures) may be necessary for PepsiCo.

Despite the company’s outstanding financial results, PepsiCo investors’ skepticism is understandable, as they wonder how much longer consumers can bear high prices.