Finimize - 🥤 Pepsi is a thirst trap

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Today's big stories

PepsiCo reported better-than-expected quarterly results
There are four niche, inflation-proof investments that are still offering headline-grabbing gains – Read Now
UK retail sales fell again last month

Eat, Drink, Be Merry

What’s Going On Here?

PepsiCo reported better-than-expected quarterly results on Tuesday.

What Does This Mean?

No matter how high prices get, you’re still going to be willing to pay for your Quaker porridge, your Aquafina water, and your tangy cheese Doritos to see you through the day. So even though Pepsi’s products were 12% more expensive last quarter than the same time in 2021, shoppers still picked up 3% more snacks and 6% more drinks (tweet this). That pushed up the drinks maker’s organic revenue – which strips out the effects of acquisitions and currency swings – by 13%. And even though Pepsi’s profit tanked by $1.2 billion on the back of the war, it still came in above expectations. The company’s optimistic things will keep going strong too: it upped its yearly organic revenue growth outlook from 8% to 10%.

Why Should I Care?

The bigger picture: Shrinkflation in action.
This is the second quarter in a row that Pepsi has upped its 2022 revenue forecast, but it’s not done the same for profit. That’s probably because the prices Pepsi pays its US suppliers are rising even faster than the prices it’s charging its customers – something that’s likely to hit Pepsi’s profit margins even more going forward. And while it could keep hiking prices, it’s probably aware that there’s only so far it can push things before cash-strapped customers tap out. That might be why it’s planning to save money in other ways – by, say, reducing product sizes.

Zooming out: Pepsi’s green ambitions are lip service.
The world’s three biggest soda companies – Pepsi, Coca-Cola, and Keurig Dr Pepper – release more heat-trapping gases than the country of Belgium, which is partly down to the production of their plastic bottles. That’s encouraged the industry to invest around $8 million in an initiative to reduce plastic use and increase recycling. But experts say it isn’t going nearly far enough: the three biggest players earn that sort of cash in three hours flat.

You might also like: How to find the companies shrugging off inflation.

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Analyst Take

Four Niche Investments That Are Still Offering Headline-Grabbing Returns

By Theodora Lee Joseph, Analyst

Investors have been looking somewhere – anywhere – for returns this year.

And since stocks and bonds aren’t going to offer much on that front, they’ve been eyeing up hedge funds, private equity, and real estate – anything slightly off the beaten track.

Trouble is, that’s pushed up the prices of those asset classes, limiting the potential for gains there too.

But some alternative asset classes have managed to keep a much lower profile, all while delivering the sorts of gains you’d be more than happy to see right now.

So that’s today’s Insight: the four alternative markets still offering up headline-grabbing gains.

Read or listen to the Insight here

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