PepsiCo Says Gas Prices Cutting Into US Consumer Food Spending

PepsiCo says high prices at the pump are keeping consumers from heading into the store to buy snacks.

The food and beverage giant reported earnings Thursday (July 9) revenues of $24.2 billion for the quarter, climbing 6.4% from the same period last year. However, this growth came from the company’s international business, with North American food volumes flat and beverage volume down 4%.

“In the U.S., we’re seeing the consumer changing behaviors, basically an acceleration of some of the behaviors we saw in the past,” CEO Ramon Laguarta said during an earnings call. “Probably some channels, more the impulse channels, have been impacted, where there is more of a correlation with the price of gas. Certain convenience stores … we’re seeing a slowdown of the conversion of traffic into purchases. We’re seeing that. Now, will it change in the coming months? It all depends on the price of gas, clearly that’s something that is beyond our control.”

“We need to see some improvement in the convenience and gas channel,” Steve Schmitt, the company’s chief financial officer, said later in the call. “Hopefully we’ll get some tailwinds from gas prices to do that. We’ll continue to push the productivity side.”

The earnings come as American consumers continue to find ways to stretch their budgets. As PYMNTS reported Thursday, that includes adopting the practice of cash stuffing, or dividing currency into envelopes labeled for things like groceries, rent or utilities.

It has become one of the more notable finance trends on social media, but it is actually one of the oldest methods of household budgeting.

“For decades, payday followed a familiar routine. Workers visited their bank to cash a paycheck, carried home paper currency and sorted it into envelopes reserved for the month’s expenses,” PYMNTS wrote. “Rent had its envelope. Groceries had another. Utility payments had another. When bills came due, consumers either returned to the bank for a money order, wrote checks from their accounts or paid companies directly. The envelopes served as a household ledger long before budgeting software existed.”

Research from PYMNTS Intelligence highlights how and why Generation Z is keen to follow in older generations’ footsteps on this front. Although this age group is commonly portrayed as rewriting the rules of commerce and banking, the research tells a different story.

“Strip away the smartphones and mobile apps, and Gen Z wants what previous generations wanted: to save money, build financial security, shop efficiently and maintain control over household finances,” the report added.