PepsiCo’s ingredients and packaging innovations may reinforce brand loyalty despite price hikes, says GlobalData

Following the fourth quarter and final year announcement results from PepsiCo;

Chloe Gbadero, Senior Beverage Analyst at GlobalData, a leading data and analytics company, offers her view:

“PepsiCo has comfortably exceeded initial expectations in Q4, driven by effective net pricing and higher advertising and marketing expenses.

“However, it’s not been smooth sailing. Rising inflation has led the company to offload increased costs onto consumers, which may prove to be an issue for the company, as GlobalData’s 2021 Q4 survey highlights that 20%* of people globally equate discounted or promotional beverages to good value for money.

“In light of recent economic uncertainty, a third (32%)* of global consumers are feeling that financial pressure. PepsiCo is relying on brand loyalty in spite of price rises, but it will be interesting to see whether consumers decide to opt for more cost-effective alternatives or remain devoted to that PepsiCo taste.

“The company’s packaging and ingredient innovations present a silver lining. During Q4, PepsiCo partnered with Pulplex, creating a prototype for the world’s first 100% recyclable paper bottle – strengthening an already extensive sustainable portfolio. Additionally, PepsiCo’s Rockstar Energy brand recently unveiled a hemp-infused canned drink, aligning with 18%** of 16–24-year-olds who, according to GlobalData’s Q2 2021 survey, prefer novel flavor combinations in soft drinks.

“Despite the negative impact of inflation, PepsiCo has demonstrated the ability to satisfy the ‘needs and wants’ of its customers during strenuous times by leveraging new innovations, promotional activity and investments in sustainability.”

* GlobalData’s 2021 Q4 Consumer Survey, 21,000 Global respondents

** GlobalData’s 2021 Q2 Consumer Survey, 21,000 Global respondents

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