It’s not inflation, it’s EXCUSE: Major companies including Wingstop and Pepsi are accused of using inflation, COVID and the Ukraine war as an excuse to raise prices and inflate bosses’ salaries.
- Companies like PepsiCo. and Wingstop have been leveraging narratives and headlines about global crises to inflate their prices and line their pockets.
- Home Depot, Walmart and Dollar Tree have also been accused of the practice.
- Companies have been pushing prices to see how much consumers will pay.
Several companies have been accused of cashing in on headlines about global crises and inflation to raise their prices and boost profits for shareholders and executives.
Trade analysts have said companies like PepsiCo., Wingstop, Home Depot, Walmart and Dollar Tree have latched on to narratives surrounding crises like the COVID-19 pandemic, Russia’s invasion of Ukraine and inflation as an excuse to rise. prices and see how. How much are consumers willing to pay?
The practice, known as “excusaflation,” has even spread to local businesses, and one Chicago bakery manager acknowledged it, telling Bloomberg that “it’s an opportunity to raise prices without getting a lot of customer complaints.” ‘.
While inflation has eased from its staggering peaks last year and the pandemic recedes further and further away, some companies have continued to intentionally increase the prices of their products, with corporate profit margins hitting a record 13.5 percent in 2021, according to Bloomberg.
And as those prices continue to rise and customers get used to them, they become normal, leaving customers paying more for products while companies line their pockets.
Pepsi Co. CEO Ramón Laguarta and WIngstop CEO Michael J. Skipworth
Pepsi Co. was recently accused of questionable practices by Rines on a recent episode of the Bloomberg Odd Lots podcast.
Rines said Pepsi’s tactics follow a strategy called price-over-volume, or POV, which passes the cost of stunted sales volumes caused by global events onto the customer.
He told Odd Lots how Pepsi lost sales in the Russian market when the nation invaded Ukraine last year, but simply raised its prices to consumers elsewhere to make up for that loss.
Effectively, Pepsi was asking consumers to reimburse them for losing the Russian market, according to Bloomberg. And while normally a price increase might send customers to competitors like Coke, the narrative about the Russian invasion has allowed Pepsi to keep customers despite price increases.
‘You shouldn’t have Pepsi being able to raise the price, in theory, right? It should be Pepsi and Coke fighting and you have minimal price increases and they don’t have the ability to really catch up with inflation,” Rines said. “And that’s just not the case right now.”
Pepsi Chief Executive Ramón Laguarta recently dodged a question from analysts about whether the company would lower prices by promoting the brand integrity it was trying to foster.
He said Pepsi was “trying to create brands that can represent greater value for consumers and consumers are willing to pay more for our brands.”
Wingstop is a brand that has been accused of ‘excuse inflation’
Pepsi Co. increases prices to compensate for lost sales volumes due to the Russian invasion of Ukraine
The Wingstop chain of chicken wing restaurants has also been guilty of using the excuse of inflation to raise their prices, Rines said, as they have continued to raise their prices even after the effects of the 2021 bird flu abated in the poultry market.
That year, wholesale prices for chicken wings increased 125 percent over the course of 12 months, according to Bloomberg.
Rines said that during that crisis, Wingstop “started raising the price, raising the price, raising the price, and they didn’t get any pushback from the consumer.”
Despite those increases, he said, “the consumer continued to buy chicken wings, and it’s not like there are a limited number of places to buy spicy chicken wings.”
And while wholesale wing prices are down 50 percent, Wingstop has kept its prices higher than ever.
“Wingstop isn’t exactly stopping raising its price. In fact, they are saying and guiding towards a typical price increase of 2 to 3 percent,” Rines said.
Wingstop’s profits, in turn, have skyrocketed nearly 250 percent since 2020, according to Bloomberg.
