PepsiCo CFO on inflation: People are still buying Doritos

Recession-resilient stocks might be the talk of the town amid the drumbeat of an economic downturn; but for one CFO, the answer might be in the snacks. "One of the reasons defensive stocks truly do well in these types of environments is because consumers still want to have these small, simple, affordable treats and luxuries in their lives", says PepsiCo CFO Hugh Johnston. He told Yahoo Finance Live he's "not that surprised" consumers aren't trading down on more products.

PepsiCo (PEP) reported first quarter earnings before the bell, showing net sales climbed 10.2%, despite overall prices rising 16%. Competitor Coca-Cola (KO) also saw strong demand for its product, fueled by its own price hikes. "You may not be able to go out and get a new car. You may not be able to go out and get a really fancy piece of technology, but you can afford a bag of Doritos or you can afford a Gatorade Zero after you work out," he explains.

You can watch Julie Hyman, Brad Smith and Brian Sozzi's full interview with Hugh Johnston here.

Key Video Moments:

00:00:16 - Johnston "not that surprised" about consumers

00:00:38 - Consumers can afford a bag of Doritos

Video transcript

- Are you surprised that consumers aren't out there trading down to more products or cutting back certain items? I talked to P&G's CO earlier in the week, Jon Moeller. He told me people are using less paper towels, but they're still out there buying these paper towels at a higher price.

HUGH JOHNSTON: No, I'm not that surprised. As you said, I've been through a few cycles on this. I mean, one of the reasons defensive stocks truly do well in these types of environments is because consumers still want to have these small, simple, affordable treats and luxuries in their lives. So you may not be able to go out and get a new car, you may not be able to go out and get a really fancy piece of technology, but you can afford a bag of Doritos, or you can afford a Gatorade Zero after you work out, or you can afford an energy drink in the morning.

So we tend to do pretty well through times when the consumer is more stressed on a macro basis because we are a simple treat in your life that makes you happy. So no, I'm not terribly surprised by it.