PLANO, Texas -- Frito-Lay Inc. said that it has delayed a price hike by putting up to one once less food into each bag, according to The Dallas Morning News. The move is in reaction to recent price increases for commodities such as corn, cooking oil and energy.
Beginning this week, in the face of continuing commodities price increases, Frito-Lay's parent company, PepsiCo Inc., has upped its prices, mostly on its large sizes, the report said. The company declined to say how big the increases have been, but PepsiCo executives Thursday told analysts that more are on the way. "For many years [image-nocss] now, we've been in a deflationary environment," said Indra Nooyi, chair and CEO of PepsiCo, Purchase, N.Y. Now, with inflation affecting the bottom line, productivity gains instituted by the company were not enough, she said.
In last year's fourth quarter, PepsiCo anticipated a 6% rise in commodity prices this year. So far, the bump has been closer to 9% or 10%, Nooyi said.
The Snack Food Association plans to raise the issue of commodities prices next month with members of Congress and officials at the U.S. Department of Agriculture, Jim McCarthy, the group's president and CEO, told the newspaper. "We have made commodities our No. 1 issue because these prices are going through the roof," he said.
Frito-Lay began boosting the price paid by consumers on Sunday, mostly on higher-priced items, John Compton, CEO of PepsiCo Americas Foods, the division that includes Frito-Lay, told the paper.
Products already downsized were exempted from the price increases, said spokesperson Jenny Schiavone, but most items will have one or the other. "The pricing activity is broad-based, and we are phasing it in across the many brands," she told the Morning News.
Compton said he expects sales to drop some as consumers notice the price increase, but he added that the changes were necessary to keep Frito-Lay profitable.
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