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Pepsi, Coke Battle Commodity Costs

PURCHASE, N.Y. (TheStreet) -- PepsiCo (PEP) feels the sting of rising commodity costs more than rivals Coca-Cola (KO) and Dr Pepper Snapple (DPS), but so far the food and beverage giant has been able to manage the risk.

PepsiCo beat profit expectations Thursday and reaffirmed its outlook despite what it called "high global commodity cost inflation."

PepsiCo said it expects commodity cost inflation of $1.4 billion to $1.6 billion this year.


In its recent quarter, PepsiCo's cost of goods sold soared 22% to $5.45 billion, though the figure took up a smaller percentage of total revenue year-over-year.

PepsiCo turned to improved operational efficiencies and price increases to help offset those costs, but CFO Hugh Johnston conceded that pricing in the first half of the year "has not been what we would have liked or expected."


Coca-Cola, which posted a weaker-than-expected 18% profit increase last quarter, reported that its cost of goods sold was up 55% year over year to $3.95 billion, or 37.5% of total revenue. In the year-earlier period, cost of goods sold was $2.54 billion, or 33.7% of total revenue.

In late March, Dr Pepper Snapple said that costs for plastic bottles and fuel to transport beverages had been rising as oil prices marched higher.

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