The CEO of global food and beverage group PepsiCo has struck an upbeat tone, predicting low unemployment and good harvests will “have a positive impact” on the global economy.
Speaking to CNBC at the World Economic Forum in Davos, Ramon Laguarta said the “negative” macroeconomic debate did not reflect the realities at a micro level, insisting there were reasons for business to feel optimistic.
“The macro debate seems to be a bit more negative than micro debate,” he said. “When I talk to a lot of my colleagues they are surprised that they’re doing better than they thought. This is the case for many people in developing and developed markets.
“There is going to be a difficult 2023, with a lot of unexpected things; that’s something we’ve learned in the last few years. We need to be prepared for the unexpected. But I’m seeing more optimism than I had before coming to Davos.
“There is very little unemployment when you look around the world. That to me is very positive. We’re having good harvests across the world that will have a positive impact in the economy. We’re seeing China opening and that’s a positive as well.
“I think we’re starting the year with some kind of degrees of grey but I’m seeing optimism in a lot of the people I’m talking to.”
Consumers “resilient”, says PepsiCo boss
Asked how the economic outlook varied across the markets in which PepsiCo operates, Laguarta said the impact of the cost of living was being felt more keenly in Europe than in the US. He then returned to the subject of low unemployment, insisting this would aide PepsiCo’s brands in continuing to grow.
“Unemployment is a critical factor and so far, unemployment is very low,” he said. “People have jobs, and [some] people have multiple jobs. They’re strategising around their budget; they’re making choices where to buy what to buy. Those are realities that we’re seeing in our categories but they continue to be resilient. We’re seeing growth in our categories, and consumers that engage with our brands.”
On how the Doritos brand owner was responding to increased pressure on consumer budgets, he added: “We feel good about our categories. We have a lot of knowledge [about] how to make our brands affordable in difficult times by giving consumers entry points and ways to continue to be engaged with our brands in spite of their tight budget.”
Looking ahead, Laguarta predicted labour would have the biggest impact of all of PepsiCo’s input costs in the year ahead, with commodity costs coming down. He added the group was still seeing some bottlenecks in its supply chain but the worst of commodity price increases were in the past.
“Crops are much better than they were last year,” he said. “So, we should see commodity costs go down. The labour market is still hot right now, which gives me optimism because wages keep going up and employment is very high. Labour is going to be the biggest source of inflation versus commodities probably going down.”