Commodity price swings are “here to stay,” said Indra Nooyi, chief executive officer of PepsiCo Inc., the world’s largest snack-food maker.
As demand continues to grow east of the Middle East and with “environmental shocks” in various parts of the world that impact supply, there will be imbalances that lift prices, Nooyi told Erik Schatzker on Bloomberg Television’s “In the Loop” at the World Economic Forum in Davos, Switzerland.
PepsiCo is “very careful” to hedge its raw-material requirements, after oil prices surged five years ago before falling, she said.
“Many of us hedged at those prices, and the next year the prices crashed,” Nooyi said. “We are managing it very, very carefully this time. We’re more selective in where we take a hedge position and where we don’t, and we hedge strategically, a little bit at a time as opposed to large hedge positions, which we took about four years ago.”