There is a possibility that the multinational food and beverage corporation PepsiCo would lay off hundreds of people. But analysts are having a hard time getting a read on the direction of the economy and the trajectory of rising food prices.
Analysts were divided as to whether those reported cuts amounted to a routine exercise in keeping operations lean, or something more. This comes at a time when analysts are trying to get a read on the trajectory of rising food prices.
The Wall Street Journal reported on Monday that PepsiCo PEP, 0.44% was planning to lay off hundreds of employees at the headquarters of its North American beverage and food businesses. According to the analysis, the latter has a far higher concentration of steeper cuts.
According to what was published in the Journal, a staff memo stated that the layoffs were carried out with the intention of “simplifying the organisation so that we can work more efficiently.”
A growing number of companies in the technology and media industries are expected to reduce their workforces, and it is expected that PepsiCo will be one of such companies.
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But they would also come after price hikes, which are a function of increasing demand and higher costs, fueled sales growth this year for PepsiCo and its competitors, even if they didn’t always sell as much things as PepsiCo did. As long as people have a desire to consume food, many executives working in the food sector believe they have the ability to continue maintaining high pricing.
An analyst at Morningstar by the name of Dan Su made the observation that Pepsi employed hundreds of thousands of people all over the world. According to a filing, PepsiCo had approximately 309,000 individuals working for it across the world as of the previous year.
She replied, “A couple hundred, I wouldn’t necessarily read too much into it as suggesting anything other than typical business activities.”
PepsiCo management have been focusing their attention on the company’s North American beverage sector in an effort to improve profitability. On the other hand, some people had the opinion that the extent of Pepsi’s workforce reduction, coupled with the fact that the corporation is so large, could help dictate how other companies in the industry feel.
The manufacturer of Frito-Lay chips, Mountain Dew soft beverages, and Quaker Oats cereals has stated that customer demand for its products is still robust despite the fact that it is paying more for commodities such as sugar, corn, and potatoes and passing those higher prices on to consumers.
According to the research, “The general labor market in the United States remains historically tight, with employers fighting for a limited pool of labour and bidding up salaries in spite of an uncertain economic future.”
In October, the representatives of the FMCG company stated that they will place an emphasis on cost reduction in order to alleviate the stress caused by the company’s low profit margins. It is one of a number of businesses that, together with it, decided to raise the prices of their products.
In addition to producing the soft drink Pepsi, the company PepsiCo also manufactures the snack foods Doritos, Lays chips, and Quaker Oats. It is estimated that approximately 309,000 individuals are employed throughout the world. Along with Walmart and Ford Motors, it has now joined the ranks of companies that have reduced their personnel.
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