With inflation becoming prevalent in grocery items, food manufacturers have taken a massive hit.
The Washington Post reported that snack powerhouses PepsiCo and Conagra Brands announced that they had lower-than-expected revenue and unit sales, citing consumers' pushback on pricey food items.
Another factor affecting low sales for both food firms is the previous month's data by the Bureau of Labor Statistics reflecting a slight price rise.
Oliver Wyman retail and consumer goods specialist Bobby Gibbs said that price increases make consumers price sensitive, resulting in them cherry picking promotional prices more.
Rising Food Prices Prompt PepsiCo, Conagra to Resort to Deals
An inflation report released Thursday (July 11) revealed that grocery prices have been leveling off since it had an 18% increase in 2020.
In a call with analysts Thursday, PepsiCo CEO Ramon Laguarta acknowledged that customers seek for better deals, saying that new entry price points and promotional mechanics are needed.
MarketWatch reported that it was looking to cut prices for its snack and beverage items, including sodas like Pepsi and chips like Lay's, Doritos, and Cheetos.
On the other hand, Conagra reported a 2.3% decline in sales, and a 1.8% decrease in volume in the recently-ended quarter. The company said that the poor sales figures were driven by "continued lower consumption trends."
Conagra CEO Sean Connollytold analysts that food companies have been seeing "value-seeking behavior" over the past year regardless of income profile.
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