Ramon Laguarta runs the company behind Lay’s, Doritos and Pepsi, and he is preparing for costs to keep climbing.
In PepsiCo’s third-quarter earnings release on Oct. 8, the chairman and CEO said “additional structural cost reduction actions” are being identified and will be put in place in the coming months, in part to “mitigate the impacts of rising input cost inflation.”
Input costs are what a manufacturer pays for ingredients, packaging, transportation and the other things it needs to make a product.
The release shows PepsiCo’s North American pricing moving in different directions for drinks and snacks. In the 12 weeks ended Sept. 5, effective net pricing rose 3% for PepsiCo Beverages North America, while its North American foods business recorded a 1% decline.
The company said volume and market share gains in its North American convenient foods business in the first 36 weeks of the year were “aided by innovation and affordability initiatives.” PepsiCo also lowered its full-year forecast for core earnings per share.
Across the grocery store, prices rose 1.8% over the 12 months ending in September, according to the Bureau of Labor Statistics. Soda and other drinks rose faster than that, while snack prices dipped slightly, but the costs Laguarta is bracing for could change that.
A manufacturer’s cost plan does not decide what lands in your cart. Here are five ways to keep snack and soda spending under your control.
1. Read the small number on the shelf tag
The unit price, usually shown per ounce or per count on the shelf tag, is the fastest way to compare a family-size bag with a stack of single-serve packs or a 12-pack of cans with a 2-liter bottle.
Smaller and more convenient packages often cost more per ounce, so compare the unit price before the sticker price. If the store tags use different units for similar items, convert them before you decide.
2. Put the store brand to a taste test
Many shoppers never try the store version of their favorite chips, crackers or soda. Buy one of each and compare them at home.
Some generic groceries are practically identical to name brands, though cola and nacho cheese chips are among the swaps shoppers are most likely to notice, so a side-by-side test at home is the way to find out.
3. Stock up when the sale cycle comes around
Chips, crackers and canned or bottled drinks keep for weeks or months, which makes them good candidates for buying ahead when they go on sale. Grocery circulars and store apps show when a favorite is discounted, and holiday and game-day promotions often feature snacks and soft drinks.
Check the best-by date and buy only what your household will eat before then.
4. Clip the coupons you can see on your phone
Many grocery chains post digital coupons in their apps and load them to a loyalty account, so the discount comes off at the register. Spend a few minutes before each trip adding offers for the snacks and drinks you already buy. These easy grocery swaps can stretch the same budget further.
5. Make drinks the cheapest line on the receipt
Grocery prices for nonalcoholic beverages rose 3.8% over the 12 months ending in September, with carbonated drinks up 4.7%, while snack prices fell 0.3%, according to the BLS, so drinks are a good place to look for savings.
Brewing iced tea or coffee at home, carrying a refillable water bottle and keeping soda for occasions rather than every meal can cut that line of the grocery bill without giving up the treat altogether.
The snack aisle still leaves room to bargain
How PepsiCo absorbs its own costs is a decision for its executives and shareholders. What you pay in the aisle depends on the package size, the brand and the timing you choose. Those choices keep paying off whichever way snack and soda prices move next.
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