PepsiCo’s innovations in packaging and new ingredients used may result in a brand loyalty from its consumers despite a hike in prices of its products, according to data and analytics company GlobalData.
Its senior beverage analyst Chloe Gbadero said 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 as rising inflation has led the company to offload increased costs onto consumers, which may prove to be an issue for the company.
Gbadero identified GlobalData’s 2021 Q4 survey highlights, which found that 20 per cent 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,” she said.
“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 per cent 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 per cent of 16 to 24-year-olds who, according to GlobalData’s Q2 2021 survey, prefer novel flavour 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.”