What America’s CEOs are saying on inflation: We’re going to charge you more

In this photo illustration, hands are seen counting US $100 bills.
In this photo illustration, hands are seen counting $100 bills.

  • Inflation, or increased pricing for goods, is on the rise as the economy reopens.
  • Biden’s administration and the Fed says the price increases should be temporary.
  • But CEOs of major companies are saying that higher prices could persist.
  • See more stories on Insider’s business page.

The country is reopening and the economy is recovering from the pandemic, and while COVID-19 cases are down, prices for goods and services are on the rise. President Joe Biden’s administration says this phenomenon, known as inflation, is not a cause for concern, but CEOs of major companies are warning that they’ll probably keep raising prices.

The Bureau of Labor Statistics’ monthly Consumer Price Index release showed that inflation in June was much higher than expected, with prices surging 0.9% over May, the highest month-over-month inflation rate since April 2008’s 1.0% increase. It was fueled by big price increases for used cars, beef, and pork, and the government insists it should cool down soon.

Labor Secretary Marty Walsh told Insider in early July that he’s not worried about the increase in prices for goods, especially given that wages also increased in June.

“The one thing that we are not concerned about is … inflation,” Walsh told Insider. “We’re still in transition, so we’re not concerned about that. So I think anytime we can push for higher wages – and the president’s been very vocal on this – that’s a good thing for people.”

Treasury Secretary Janet Yellen said in May that the high prices should only last through the end of this year, and Biden said during a June press conference that the “overwhelming consensus” is that inflation should “pop up a little bit and then come back down” – similar to the consensus from America’s central bank, led by Federal Reserve Chair Jerome Powell.

The economics field is not close to that consensus. Former Treasury Secretary Larry Summers has pointed to Biden’s $1.9 trillion stimulus as the “least responsible” fiscal policy in 40 years, one that could potentially trigger the dreaded hyperinflation. Increasingly, executives are saying that price increases are here to stay. Here’s what else they’re saying:

JPMorgan Chase CEO Jamie Dimon

JPMorgan CEO Jamie Dimon.
JPMorgan CEO Jamie Dimon.

JPMorgan Chase CEO Jamie Dimon said during an earnings call on July 13 that inflation “could be worse than people think.”

“I think it’ll be a little bit worse than what the Fed thinks,” Dimon said. “I don’t think it’s only temporary.”

In June, Insider reported that Dimon said the bank was stockpiling $500 billion in cash in anticipation of higher inflation, during which he expressed the same concerns with the nature of inflation, in that it will be more persistent than what people are saying.

JPMorgan did not immediately respond to Insider’s request for comment.

 

BlackRock CEO Larry Fink

GettyImages 480950078

Larry Fink, the CEO of investment management corporation BlackRock, reiterated Dimon’s concerns on the nature of inflation in a CNBC interview on July 14.

“[Policymakers] are saying jobs are more important than consumerism,” Fink said. “That is going to probably lead to systematically more inflation.”

Biden has consistently touted job growth as a primary achievement of his administration so far, and Republican lawmakers have even cut off unemployment benefits early in an effort to incentivize people to return to work.

But Fink said that move takes the focus away from consumers, causing large-scale price increases.

“I’m hearing from every CEO that they have huge price increases, and they’re passing them on across the board, here in the United States and in Europe,” Fink said.

BlackRock did not immediately respond to Insider’s request for comment.

PepsiCo CFO Hugh Johnston

FILE PHOTO: Bottles of Pepsi are pictured at a grocery store in Pasadena, California, U.S., July 11, 2017.   REUTERS/Mario Anzuoni/File Photo
FILE PHOTO: Bottles of Pepsi are pictured at a grocery store in Pasadena

To help counter the effects of inflation, some business leaders are explicitly saying they’re raising prices for their goods on consumers. PepsiCo’s CFO Hugh Johnston is one of them.

“Is there somewhat more inflationary pressures out there? There is,”  Johnston said on an earnings call on July 13. “Are we going to be pricing to deal with it? We certainly are.”

The CEO of industrial supplies company Holden Lewis echoed Johnston on an earnings call the same day, saying that “based on what cost is doing,” the company will have to increase prices on consumers.

Lewis said, though, that a previous price increase the company made was received “fairly well,” suggesting consumers might not be discouraged by increased prices. 

Pepsi did not immediately respond to Insider’s request for comment.

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A Fortune 500 CEO recruiter shares the one trait to develop if you want to be a corporate leader: adaptability

Clarke  Murphy, CEO of Russell Reynolds
Clarke Murphy, CEO of executive search and recruiting firm Russell Reynolds.

  • Clarke Murphy is a CEO recruiter and adviser for Fortune 500 companies.
  • He said board rooms are looking for leaders with a high “LQ” or learning quotient.
  • Having high “LQ” means you’re able to adapt to change quickly.
  • This article is part of a series called “Secrets of Success,” which examines specific leadership tips from prominent business leaders.

For over three decades, Clarke Murphy has helped the biggest companies name their next CEO. For the last eight years, as the CEO consultancy Russell Reynolds, Murphy has advised more than 30 Fortune 500 CEO appointments and over 60 board appointments at companies that will remain unnamed due to privacy agreements.

While Murphy’s advice spans multiple industries including finance, retail, and technology, he’s found that boardrooms and executive committees today are looking for leadership candidates with one particular trait in common: a high LQ – a person’s willingness and ability to adapt to change.

“CEOs are not paid to have all the answers,” Murphy told Insider. “Today, it’s about your ability to be agile.”

The events of 2020 forced leaders to double down on this trait, the CEO adviser explained. Many corporate executives had to move their employees to remote work in a matter of days and ensure their workers were safe. Weeks later, they had to respond to demands for racial equity amid nationwide protests with statements and pledges. The role of the CEO changed, and leaders have had to adapt.

“What the COVID pandemic has brought on is the need for pretty rapid transformation,” he said. “Leaders not only have to have emotional intelligence, they have to have LQ, the ability to learn, listen, watch, and communicate transformation.”

How to develop LQ

To develop your own sense of LQ, Murphy recommends professionals ask their bosses for feedback, explore how they can improve work for their direct reports, and think about the problems their consumers face.

Ask your boss where you feel you could grow personally and professionally. Having this understanding will help you focus on how to become a better leader, Murphy said.

“You want to show that you’re always learning,” he said, “that you’re always improving.”

The second is to explore the obstacles your direct reports encounter at work, in order to make your organization more efficient. According to Murphy, this will help you lead transformation within your company.

Lastly, Murphy recommends that managers keep a pulse on the issues their customers care about, like reducing pollution or increasing data privacy, so they can develop innovative products.

“Successful leaders of the future will know these three things,” Murphy said. “They’ll know where they can grow and innovate to help their stakeholders.”

The PepsiCo case

Ramon Laguarta
PepsiCo CEP Ramon Laguarta has helped the company reinvent itself over the past few years.

In addition to the transformation exhibited by corporate leaders during the pandemic, one CEO, PepsiCo’s Ramon Laguarta, stands out to Murphy for his ability to be agile.

Laguarta has grappled with rapidly changing consumer habits that pose a threat to the company. People are looking for healthier food options and environmentally friendly products. That’s a potential risk for a company that sells snacks and plastic bottle products.

In response, Laguarta doubled down on a decades-long effort to cut calories in its products and engineer new, healthier ones. In the company’s 2021 statement to investors, the Pepsi CEO spoke about the company’s “special focus on no sugar beverages” and its continued efforts to “reduce added sugars, sodium and saturated fat in many of our products.”

He also announced the company’s goal to cut greenhouse gas emissions by more than 40% by 2030, and has launched new climate-friendly agricultural projects. All the while, the company’s stock has been on a generally-upward trajectory.

“Laguarta has really been able to usher in change,” Murphy said. “He’s an example of truly embracing transformation.”

More CEOs will be tested on their LQ as the climate crisis worsens, Murphy added. Investors and consumers will want leaders who are able to respond to environmental, social, and good governance (ESG) issues like the need for more transparency around diversity efforts as well as carbon-cutting measures.

“I think the great leaders of the future will balance operational profit with sustainable leadership,” Murphy said. “They’ll adapt to changing times.”

Read the original article on Business Insider

Comcast’s Peacock faces new tests from advertisers, viewers

Hi and welcome to this weekly edition of Insider Advertising, where we track the big stories in media and advertising. I’m Lucia Moses, deputy editor here.

Remember you can sign up to get this newsletter daily here.

First, senior reporter Lauren Johnson is hosting a webinar about how advertisers can navigate the death of third-party cookies on April 22 with execs from The Trade Desk, Mars, The Washington Post, and R/GA. Sign up here.

What we’re following this week:

Peacock’s big test

Recess takes on PepsiCo

Playboy’s NFT


Peacock Comcast NBCUniversal
Al Roker.

Peacock’s big test

Claire Atkinson took the temperature on Comcast’s streaming venture Peacock, which is facing more competition for viewers and advertisers as it enters year two.

Peacock is key to NBCUniversal’s effort to keep TV dollars as viewers shift online – and to Comcast’s plan to grow broadband customers by offering them a freebie.

From Claire’s story:

As Peacock nears its first birthday, NBCUniversal’s streamer is facing fresh challenges – and doubts.

Peacock has delivered in its first year, providing average active user guarantees to launch partners like Target, Capital One, State Farm, and Verizon.

“Peacock has definitely met or exceeded expectations,” Horizon Media’s co-chief investment officer David Campanelli told Insider. “They are outperforming their average active user estimates, which is good to see, and content has been high quality as expected.”

But as NBCUniversal enters one of the most transformational upfront negotiating periods in years, advertisers are ready to cite Peacock’s growing competition to squeeze out better prices, narrower targeting, and more data from the ratings-free black box that is streaming.

Read the rest here: Comcast’s Peacock is facing a tough test as competition heats up and advertisers seek more viewer data


Recess products

Recess takes on PepsiCo

Recess got its start making CBD beverages meant to help its buyers relax. Now it’s betting on another calming ingredient, with magnesium-based beverages, Alex Bitter reports.

It’s a way for Recess to grow without waiting for the federal government to rule on CBD – and capitalize on the success of CPG giants like PepsiCo and Danone have had with similar products.

CBD lacks regulation at the federal level, which effectively bans CBD brands from key national retailers.

But while magnesium is recognized as safe, the science connecting it with reducing anxiety is less solid.

Read the rest here: Recess scored a hit with its millennial pastel-hued CBD seltzer. Now its CEO is challenging PepsiCo with a move into magnesium-infused ‘relaxation beverages.’


Former playboy model Esté Swanepoel holding an mosaic framed picture of the iconic bunny at the Playboy publishing gala event
Former playboy model Esté Swanepoel holding an mosaic framed picture of the iconic bunny at the Playboy publishing gala event

Playboy’s NFT

Playboy is joining the growing list of media organizations launching non-fungible tokens, in this case to showcase its art and photography archive and to release original works from artists, Kari McMahon reports.

If that doesn’t jibe with your image of Playboy, consider Playboy’s roots. “In the first issue of Playboy magazine, there’s this line, ‘Picasso, jazz, Nietzsche, and sex, those are the four ideal conversation topics for any sophisticated person’,” said Rachel Webber, Playboy’s chief brand officer and president of corporate strategy. “Right in the core of Playboy’s DNA is appreciation for art and for great artists.”

Other things you might not know about the more woke Playboy today: It’s no longer associated with the Hefners. The magazine said in 2019 it would predominantly hire women photographers to shoot Playmates and that it would have intimacy coordinators on set.

Read the rest here: Playboy is the latest company to hop on the NFT trend. The company’s chief brand officer explains why the digital asset revolution is ‘an enormous business opportunity’.


Other stories we’re reading:

Thanks for reading, and see you next week. And remember you can sign up for this newsletter here.

– Lucia

Read the original article on Business Insider

Mountain Dew is unveiling Frost Bite Zero Sugar at Walmart starting Monday

4734835_MD_FrostBite_Zero_Bott_20oz_RGB_FR (2)
  • Mountain Dew Frost Bite Zero Sugar will be sold at over 4,300 Walmart stores nationwide, the company said.
  • “This new offering leans into our steadfast commitment to consistently deliver flavor excitement,” said VP Marketing Nicole Portwood.
  • Comfort foods, like sodas, chips and pizza, have been popular with Americans during the coronavirus pandemic.
  • See more stories on Insider’s business page.

Mountain Dew is launching a zero-sugar version of its Frost Bite drink at Walmart starting Monday, March 22.

Mountain Dew Frost Bite Zero Sugar will be sold at over 4,300 Walmart stores nationwide, the company said in a statement.

“This new offering leans into our steadfast commitment to consistently deliver flavor excitement and variety of choice to DEW Nation – and we are thrilled to be able to do just that with Walmart,” said Vice President Marketing at Mountain Dew Nicole Portwood in the statement.

The PepsiCo-owned brand first launched the regular Mountain Dew Forst Bite in 2020.

Comfort food such as soda, pizza, chips and other snacks, were in demand during the pandemic lockdown. Last month, Pepsi said that it is expecting revenue to increase in 2021. The company’s net revenue increased 8.8% to $22.46 billion in the fourth quarter ending December 26.

Earlier this year, the company revealed a watermelon-flavored drink called Mountain Dew Major Melon that also came as a zero-sugar beverage. The new drink was Mountain Dew’s first permanent flavor offered in over a decade, according to the company.

In 2020, Mountain Dew launched a margarita flavored drink that was added to Red Lobster’s menu as the DEW Garita. The drink which received mixed reactions was the company’s first official cocktail, Insider previously reported.

Pepsi is also rolling out Pepsi Mango on Monday, March 22, its new permanent soda flavor. The beverage comes as a regular and a zero-sugar drink, the company announced on Thursday.

Read the original article on Business Insider

Pepsi will release a mango-flavored soda next week, its first permanent flavor launch in five years

Pepsi Mango 1
Pepsi Mango

  • Pepsi Mango is the company’s first permanent flavor launch in five years.
  • Pepsi is promoting the new flavor through a national TV commercial with singer Jason Derulo.
  • Pepsi Mango will be sold nationwide as a regular and a zero-sugar drink.
  • See more stories on Insider’s business page.

For the first time in five years, Pepsi is unveiling a new, permanent soda flavor.

Pepsi Mango will roll out nationwide on Monday, March 22, the soda company said Thursday. Pepsi will be launching both a zero sugar and regular version of the new drink, the company said in a press release.

The soda brand is promoting the new flavor through a national TV commercial “Take You Dancing,” by singer Jason Derulo.

Pepsi Mango 2
Pepsi Mango

“Our team has created a surprisingly perfect match with Pepsi Mango, combining the delicious taste of Pepsi cola with the flavor of a sweet, juicy mango,” Todd Kaplan, Vice President of Marketing at Pepsi, said in the statement.

Pepsi said that it is expecting revenue to increase in 2021 as COVID-19 restrictions lift while vaccines roll out. Sales of comforting food, like soda and snacks, have been strong during pandemic lockdowns. The company posted a revenue increase of 8.8% to $22.46 billion in the fourth quarter ending December 26.

Earlier this month, Pepsi launched a line of cocktail mixers called Neon Zebra, as trends continue to show more consumers drinking at home. The product’s launch also signals that Pepsi is taking a different approach in appealing to consumers who are seeking alcoholic alternatives to beer and wine.

As per its Pepsi Mango promotion, Pepsi will launch a new campaign in April to help single people find their match by turning its advertising inventory on select social media platforms into real dating ads, the company said.

Read the original article on Business Insider