Price and Mix Growth
How much of the growth comes from charging more, or from selling a richer mix of products, customers, or regions? Price-led growth can be powerful, but it can fade if customers push back or switch.
The $18 Big Mac
In 2023, McDonald's sales at restaurants open at least a year, called comparable sales, rose 9.0% worldwide and 8.7% in the United States. The company said the U.S. growth came from "strong average check growth driven by strategic menu price increases." In other words, customers were mostly paying more per visit, not visiting more.[^1]
In the spring of 2024, a post about an $18 Big Mac meal went viral. McDonald's USA president Joe Erlinger answered with an open letter calling such prices an exception, not the rule. But he also confirmed that the average McDonald's menu item cost about 40% more than in 2019. The average Big Mac had gone from $4.39 to $5.29.[^2]
Customers were already reacting. CEO Chris Kempczinski said "the battleground" in fast food was now "the low-income consumer."[^3] In the second quarter of 2024, global comparable sales fell 1.0%, and U.S. comparable sales fell for the first time since 2020. The U.S. result was "driven by negative comparable guest counts, partly offset by average check growth due to strategic menu price increases."[^4] Fewer people were coming in, and higher prices no longer made up for it. On June 25, 2024, McDonald's launched a $5 Meal Deal to win them back.[^3]
The deal flipped the arithmetic. In the fourth quarter of 2024, U.S. comparable sales fell 1.4%, this time because of "a decline in average check, partly offset by slightly positive comparable guest counts."[^5] Cheap bundles brought a few visitors back, but each visitor spent less. Price and mix, which had carried growth a year earlier, were now pulling it down. In the first quarter of 2025, U.S. comparable sales fell 3.6%, "primarily driven by negative comparable guest counts," made worse by comparison with a 2024 quarter that had an extra Leap Day.[^6]
The problem lasted. In late 2025, Kempczinski said traffic from lower-income customers had dropped "nearly double digits."[^7] Heavy promotion bought a strong quarter: U.S. comparable sales rose 6.8% in the fourth quarter of 2025, with both check and guest counts up "primarily from successful marketing promotions."[^8] Then the lift faded. In the second quarter of 2026, U.S. comparable sales grew just 0.8%, with higher checks, "including favorable product mix," partly offset by fewer guests again. Global comparable sales grew 1.3%.[^9]
In three years McDonald's showed every combination: price up while visits fell, price down while visits held, and promotions that bought visits one quarter at a time. Investors who read 9% growth as proof of health missed the key question: how much of that growth came from price, and how long could customers keep paying it? This chapter is about answering that question.
What price and mix growth is
Revenue can grow for two broad reasons. A company can sell more units: more burgers, cars, or cans of soda. That is volume, covered in Volume Growth. Or it can earn more money per unit. That is price and mix growth, and it has two pieces.
Price is the simple one: charging more for the same thing.
Mix is about which things customers buy. Imagine a coffee shop that sells small coffees for $3 and large ones for $5. Last year, half its customers bought each size, so the average cup brought in $4. This year, prices haven't changed, but 70 of every 100 customers choose a large. Now the average cup brings in $4.40. No price changed and the shop sold the same number of cups, yet revenue rose 10%. That is pure mix: customers shifted toward pricier items.
Mix comes in several kinds:
- Product mix: more premium items, like large drinks instead of small, or a top car model instead of the base one.
- Package mix: the same product in a different size. A single bottle usually earns more per ounce than a 24-can case.
- Channel or customer mix: more sales where prices are higher. A soda sold cold in a restaurant earns more than the same soda in a big supermarket pack.
- Geographic mix: more sales in higher-price countries. Growing faster in a low-price country drags the average down, even if nothing else changed.
Mix can also work against a company. When customers trade down to cheaper items, that is unfavorable mix. McDonald's $5 Meal Deal is an example: a customer who used to buy a $10 meal and now buys the $5 bundle counts as the same visit, but the average check falls.
Price and mix together are sometimes called revenue per unit or average selling price. Both are averages, and an average can move for reasons that have nothing to do with the price tag.
How to measure it
You can estimate price and mix from the change in revenue per unit:
Revenue growth ≈ Volume growth + Price/mix growth
Price/mix growth = (Revenue per unit this year ÷ Revenue per unit last year) − 1
Back to the coffee shop. Last year: 50 small cups at $3 and 50 large at $5, so $400. This year it again sells 100 cups, 70 of them large, and raises both prices 5% (to $3.15 and $5.25). Revenue is 30 × $3.15 + 70 × $5.25 = $462, up 15.5%. Taking it apart:
- Volume: 100 cups both years, so 0%.
- Mix: at last year's prices, this year's cups would bring in 30 × $3 + 70 × $5 = $440, which is 10% more than $400.
- Price: $462 versus $440 is the extra 5%.
Since 1.10 × 1.05 = 1.155, the two pieces explain the full 15.5%. Many companies show these pieces in a revenue bridge, a small table splitting growth into volume, price/mix, currency, and acquisitions. The "≈" in the formula is there because the pieces multiply rather than add; for small changes, adding them is close enough.
Mix can also hide price. Picture a lemonade stand with two locations. In the rich town it charges $2 a cup; in the poorer town, $1. Last year it sold 100 cups in each, for $300, or $1.50 a cup. This year it raises both prices 10%, to $2.20 and $1.10, and sells 100 cups in the rich town but 300 in the poorer one. Revenue is $220 + $330 = $550, from 400 cups, or about $1.375 a cup. Every price went up 10%, yet revenue per cup fell about 8%.
- Volume: 200 cups to 400, up 100%.
- Mix: at last year's prices, this year's cups would bring in $200 + $300 = $500, or $1.25 a cup, down about 17% from $1.50.
- Price: $550 versus $500 is the 10%.
Since 2.00 × 0.833 × 1.10 ≈ 1.83, the pieces explain the 83% revenue growth. This is not a bad result. The stand grew fast. But anyone who looked only at revenue per cup would wrongly conclude it had cut prices. The worked example later in this chapter shows Coca-Cola facing exactly this pattern in Asia.
The price that counts is the realized price: what customers actually pay after discounts, coupons, and promotions, not the list price on the menu. Raising list prices 5% while handing out 4% more in discounts is really a price rise of about 1%.
Why it matters
Price is the strongest profit lever. In a classic Harvard Business Review study, McKinsey's Michael Marn and Robert Rosiello used the average economics of 2,463 companies. A 1% price increase, with no loss of volume, raised operating profit by 11.1%. A 1% volume increase raised it by only 3.3%. An extra dollar of price costs nothing to make, so it falls straight to profit. It works in reverse too: a 1% price cut would wipe out 11.1% of operating profit. The authors also showed how a "pocket price waterfall" of discounts quietly separates list price from what the company keeps.[^10]
Warren Buffett put it bluntly in 2010: "The single-most important decision in evaluating a business is pricing power. If you've got the power to raise prices without losing business to a competitor, you've got a very good business."[^11] That ability is the subject of Pricing Power.
But customers respond. A price elasticity measures how much the quantity sold changes when price changes. A study of 1,851 price elasticities from 81 studies, mostly of individual brands, found an average of −2.62: a 1% price rise for a brand was linked to about 2.6% fewer units sold. The same study found that sales had become more sensitive to price over the four decades its studies covered.[^12] Strong brands beat that average, but the default is that higher prices cost volume.
How much volume can a company afford to lose? Take a pizza shop that sells pizzas for $10. Each costs $6 in dough, cheese, and boxes, so each sale leaves $4 to cover rent and wages and to provide profit. If the shop raises its price 5% to $10.50, each sale now leaves $4.50. It can sell 4 ÷ 4.50 ≈ 89% as many pizzas and still earn the same total. In other words, it can lose up to about 11% of its volume before the price rise backfires. With the average elasticity of −2.62, a 5% price rise would cost about 13% of volume, which is more than the shop can afford. Only a shop whose customers are less sensitive than average comes out ahead. That is why the volume line matters as much as the price line.
Discounts rarely build lasting demand. Going the other way, a price cut or promotion usually brings a burst of sales. A study of 560 grocery categories in Dutch supermarkets over four years found that promotions had strong short-term effects on total category sales, with an average elasticity of 2.21. But the effects faded within about 10 weeks on average, and "their long-term impact is essentially zero." The authors concluded that promotions mainly preserve "the status quo."[^13] Discounts can also annoy loyal buyers. In a 28-month field experiment with more than 50,000 customers of a retailer, people who bought an item and later saw it sold for less made fewer purchases afterwards. The effect was largest among the most valuable customers.[^14] A company that grows by discounting may be renting customers, not winning them.
Price-led growth tends to fade. After inflation surged in 2021–22, consumer-goods companies raised prices sharply. Bain & Company found that leading consumer-goods makers had raised prices by more than 20% on average since the third quarter of 2021, and estimated that price accounted for 95% of consumer-products sales growth in the U.S. and Europe in 2023. Yet their average operating margin stayed "near a 10-year low," a sign that much of the extra price only covered higher costs.[^15] In 2024, sales growth in developed markets slowed from 7.7% to 4.5%, with volumes "disappointingly flat," and prices in the U.S. and the European Union were more than 20% higher than in early 2020.[^16]
Price rises are not all the same. Economists at the International Monetary Fund split the rise in euro-area consumer prices from early 2022 to early 2023 into its sources. Higher import prices, mostly energy, explained about 40%. Higher domestic profits explained about 45%. Firms, they found, "passed on more than the nominal cost shock," though the limited data did not show a widespread rise in markups.[^17] For an investor, the lesson is that the same 8% price increase can be pure cost pass-through at one company and a fatter margin at another. The revenue bridge cannot tell them apart; the margin can.
The key questions investors ask
1. Is price and mix contributing more or less than before?
Start with the trend over at least three periods. The thesis is improving when realized price or favorable mix adds more growth without a big loss of volume, stable when the contribution matches recent periods, and deteriorating when discounting or unfavorable mix drags growth down.
Then compare it two ways. Against peers: 5 points of price/mix means more if rivals managed 2 than if they managed 8. Against the company's own targets: many companies give a yearly forecast for organic growth, and a big beat or miss usually traces back to price/mix. A company that keeps beating its forecast because of price may be finding pricing power it did not expect, or riding inflation it did not control.
2. What is it costing in volume?
This is the McDonald's question. Price rises that customers accept show strength. Price rises that drive customers away borrow from the future. The warning sign is rising price/mix alongside volume that keeps falling for several quarters: "pricing gains require material volume sacrifice." When a company suddenly launches value menus or heavy promotions, it is often admitting its prices got ahead of its customers.
A useful habit is to put price/mix and volume side by side for each segment, not just for the whole company. A strong total can hide one region gaining volume while another loses it. Also watch for trading down inside the company's own range, such as more value meals, smaller packs, or base models. That shows up as unfavorable mix before it shows up as lost customers.
3. Is it real, and can it last?
Not every price rise reflects strength. A company may only be passing on higher costs for ingredients, wages, or energy, leaving profit no better. In very high-inflation countries, local prices can soar without anything changing in real terms. Mix gains can be one-offs too: a hit premium product lifts the average this year but not next, and a shift between channels can reverse when circumstances change.
Three tests help. Does gross margin, the share of revenue left after the direct cost of making the product, rise as prices rise? Does the price stick after costs stop climbing? And is the mix shift driven by customers choosing richer products, or by something temporary such as a shortage? The most durable growth comes from customers who value the product enough to keep paying more.
Nuances
Each industry has its own words. The idea is the same everywhere, but the labels change:
- Consumer goods report "pricing" and "mix," sometimes separately and sometimes as one "price/mix" line. PepsiCo uses effective net pricing, which includes "discrete pricing actions, sales incentive activities and mix."[^18] Check each company's definition before comparing two of them.
- Restaurants split comparable sales into guest counts and average check, which McDonald's says is "affected by changes in pricing and product mix."[^4]
- Homebuilders report average selling price, which falls when incentives rise (see Lennar in Revenue Growth). A bigger share of smaller, cheaper homes lowers it too, which is mix.
- Carmakers track average transaction prices and dealer incentives. A shift toward trucks or top trim levels is mix; a rise in incentives is a price cut in disguise.
- Airlines use yield, the revenue per passenger per mile flown. Yield rises with fares but also with mix, such as more business travelers or more seats in premium cabins.
- Hotels split revenue per available room into occupancy (volume) and average daily rate (price and mix).
- Subscription and software businesses track revenue per user. A price rise shows up first as higher revenue per user and only months later in cancellations, which overlaps with Existing-Customer Expansion.
- Drugmakers have a large gap between list price and net price, because of rebates paid to insurers and middlemen. Only the net price counts.
- Chipmakers and hardware companies see big swings in average selling price when a new, pricier generation of product replaces an older one. That is mix, and it can reverse when the cycle turns.
Luxury is an extreme case. Some luxury brands deliberately sell fewer units each year and grow almost entirely through price and mix. The Ferrari case in Pricing Power shows a carmaker growing revenue while shipping slightly fewer cars. For such firms, flat volume is a choice, not a warning.
Hidden price changes. A smaller pack at the same price is a price increase. The U.S. Bureau of Labor Statistics measures it that way by tracking price per ounce. Over 2015 to 2019, it found that downsizing added 2.81% to its baby-food price index and 2.64% to snacks, though across all goods and services the effect was only about 0.01% a year.[^19] Companies may report such changes as price, as mix, or not at all, so read the commentary.
Inflation and currency. In a high-inflation country, prices rise fast while the currency loses value. Coca-Cola's Latin America segment reported +11% price/mix in 2025 but a −12% currency effect, so reported revenue fell 2%.[^20] Read price and currency together.
Gross margin is the payoff. If prices rise 6% and costs rise 6%, the company has run in place. Gross Margin shows whether pricing turns into profit.
The siblings. Price and mix is one piece of Organic Growth; Volume Growth is the other. Volume itself can be split into Customer Base Growth and how much each customer buys.
A contrasting case: PepsiCo gives the price back
PepsiCo's North American snack business, which sells Lay's, Doritos, and Cheetos, shows what happens when price-led growth runs out and the company reverses course. The table uses PepsiCo's own organic figures, which remove currency and acquisitions. Through 2024 it covers Frito-Lay North America; from 2025 it covers PepsiCo Foods North America, a new segment that combines Frito-Lay with Quaker, so the later rows are close but not identical.[^21][^22][^23][^18][^24][^25]
| Period | Organic revenue growth | Organic volume | Effective net pricing |
|---|---|---|---|
| FY2022 (Frito-Lay North America) | +17% | 0% | +17% |
| FY2023 (Frito-Lay North America) | +9% | −1% | +10% |
| FY2024 (Frito-Lay North America) | −0.5% | −2.5% | +2% |
| FY2025 (PepsiCo Foods North America) | −2% | −2% | +1% |
| Q1 FY2026 (PepsiCo Foods North America) | +1% | +2% | −1% |
| Q2 FY2026 (PepsiCo Foods North America) | −2% | 0% | −2% |
In 2022 and 2023, the business looked like a textbook case of pricing power: pricing of 17% and then 10% while volume barely moved. Then volume fell for three straight years, and pricing stopped adding much. On February 3, 2026, PepsiCo announced it would cut prices on Lay's, Doritos, Cheetos, Tostitos, and other snacks by up to nearly 15%, saying consumers had told it that "rising everyday costs are making their daily decisions harder."[^26]
The cut worked on volume. In the first quarter of 2026, volume rose 2% and the company said affordability efforts "began to take hold."[^24] In the second quarter, the business gained volume market share, but net revenue declined, which PepsiCo said "primarily reflects lower effective net pricing."[^25] The pizza-shop arithmetic was running in reverse: to come out ahead, a price cut must win back more volume than the price it gives up, and so far it had not.
Using the thesis definitions, this is a deteriorating price/mix story that management chose on purpose, betting that volume would follow. The test is simple: within about 18 months of the cut, does volume growth exceed the lost pricing, so that organic revenue grows again? Two quarters were not enough to tell.
A worked example: Coca-Cola
Coca-Cola reports price/mix as its own line every quarter, which makes it ideal for this thesis. It sells concentrate (flavored syrup) to bottlers, who make and sell the finished drinks. It measures volume in unit cases of 24 eight-ounce servings, and its revenue bridge uses concentrate sales as the volume line. Price/mix covers "price changes, the mix of products and packages sold, and the mix of channels and geographic territories where the sales occurred."[^20]
The numbers
Here is the bridge for fiscal years 2019 to 2025 (ending December 31) and the first half of fiscal 2026, with gross margin as reported:[^27][^28][^29][^30][^31][^32][^20][^33]
| Period | Unit case volume | Concentrate sales | Price/mix | Organic revenue growth | Reported net revenues | Gross margin |
|---|---|---|---|---|---|---|
| FY2019 | +2% | +1% | +5% | +6% | $37.3 billion (+9%) | 60.8% |
| FY2020 | −6% | −7% | −2% | −9% | $33.0 billion (−11%) | 59.3% |
| FY2021 | +8% | +9% | +6% | +16% | $38.7 billion (+17%) | 60.3% |
| FY2022 | +5% | +5% | +11% | +16% | $43.0 billion (+11%) | 58.1% |
| FY2023 | +2% | +2% | +10% | +12% | $45.8 billion (+6%) | 59.5% |
| FY2024 | +1% | +2% | +11% | +12% | $47.1 billion (+3%) | 61.1% |
| FY2025 | 0% | +1% | +4% | +5% | $47.9 billion (+2%) | 61.6% |
| H1 FY2026 | +4% | +6% | +2% | +8% | $25.9 billion (+9%) | 62.9% |
Reported growth differs from organic growth because of currency and of buying and selling businesses. In 2019, for example, acquisitions, including the Costa coffee chain, added 7 points to reported revenue.[^27]
Mix in action: 2020 and 2021
The pandemic years show mix working on its own. In 2020, stadiums, cinemas, and restaurants closed while supermarket sales held up. Coca-Cola said volume growth in "at-home channels was more than offset by coronavirus-related pressure in away-from-home channels," and in the fourth quarter price/mix fell 3%, "driven by negative channel and package mix."[^28] A Coke poured from a restaurant fountain or sold as a single cold bottle earns more per serving than one from a supermarket multipack. When the expensive channels shut, revenue per case fell even though Coca-Cola had not cut prices.
In 2021 the same effect ran backwards. Price/mix rose 6%, which the company credited to "pricing actions in the marketplace along with favorable channel and package mix due to cycling the impact of the pandemic."[^29] Neither year said much about pricing power. Both said a lot about where people were drinking.
Where the 2025 price/mix came from
The company total hides very different regions. Here is the 2025 bridge by segment:[^20]
| Segment, FY2025 | Unit case volume | Price/mix | Currency | Organic revenue growth |
|---|---|---|---|---|
| Europe, Middle East & Africa | +3% | +2% | 0% | +6% |
| Latin America | 0% | +11% | −12% | +10% |
| North America | −1% | +5% | 0% | +4% |
| Asia Pacific | 0% | +4% | −3% | +5% |
Latin America produced most of the price/mix, and currency took nearly all of it back. North America raised prices and lost a little volume. Europe, the Middle East, and Africa grew mainly through volume.
Question 1: Is the contribution rising or falling?
Falling. Price/mix added 10–11 points a year from 2022 to 2024, then 4 points in 2025 and 2 in the first half of 2026. Some of the earlier boost wasn't pricing power: Coca-Cola said about 5 of 2024's 11 points came from "markets experiencing intense inflation," such as Argentina.[^32] The underlying figure was closer to 6 points, so part of the decline is a return to normal. Before inflation, in 2019, price/mix was 5 points.[^27]
The company's own forecasts tell the same story. It forecast organic growth of 7% to 8% for 2023 and delivered 12%; it forecast 6% to 7% for 2024 and delivered 12%.[^30][^31] In both years concentrate sales grew only 2%, so price/mix did almost all the work. For 2025 it forecast 5% to 6% and delivered 5%, at the bottom of the range, as price/mix slowed.[^32][^20]
Question 2: What did it cost in volume?
Little, compared with a close rival. Coca-Cola's North America segment and PepsiCo's North American beverage business sell into the same stores to the same shoppers:[^30][^31][^32][^20][^21][^22][^23][^18]
| Year | Coca-Cola North America: unit case volume | Coca-Cola North America: price/mix | PepsiCo Beverages North America: organic volume | PepsiCo Beverages North America: effective net pricing |
|---|---|---|---|---|
| 2022 | +2% | +12% | +1% | +10% |
| 2023 | −1% | +8% | −5% | +12% |
| 2024 | 0% | +10% | −3.5% | +4% |
| 2025 | −1% | +5% | −3.5% | +5% |
Over the four years, Coca-Cola's North American price/mix compounded to roughly 40% while volume ended about where it started. PepsiCo's beverage pricing compounded to roughly 35% while its volume fell about 10%. The measures are not identical: PepsiCo makes and distributes many of its own drinks in North America, so its figures cover finished beverages, while Coca-Cola's segment mostly sells concentrate to bottlers. Still, the gap is large: in this period Coca-Cola's customers accepted its prices with far less pushback. That is evidence of real pricing power, not just inflation.
The newer data is mixed. In the first half of 2026, Coca-Cola's North American volume rose 3% with price/mix of 3%, a healthier balance.[^33] But in Asia Pacific, volume rose 8% in the second quarter while price/mix fell 9%, "primarily driven by unfavorable mix and affordability initiatives."[^33] Consolidated volume growth was "led by India, China, the United States and Brazil." Growth led by emerging markets and by cheaper "affordability" offerings fits the lemonade-stand pattern; in 2021 the company had blamed a similar drop in the region partly on "growth in emerging and developing markets outpacing developed markets."[^29] That may build future customers, but volume must now do more of the work.
Question 3: Is it real, and can it last?
Mostly real, with caveats. Gross margin dipped to 58.1% in 2022, as the cost of making the drinks rose faster than revenue. It then climbed to 61.6% in 2025 and 62.9% in the first half of 2026, so pricing ended up more than covering costs. Comparable operating margin, which excludes one-off items, rose from 28.7% in 2022 to 31.2% in 2025.[^30][^20] Part of the margin gain came from selling lower-margin bottling businesses, which the company named as a driver in 2024, so not all of it is pricing.[^32]
Calendar timing also matters. The first quarter of 2026 had six more days than the year before, and the fourth quarter will have six fewer. Unit case volume is measured per day and is not affected, but concentrate sales and revenue are.[^33] That helps explain why the first half grew 8% while the company raised its full-year forecast for organic growth only to about 5% in July 2026, up from 4% to 5% in February.[^33][^20]
The thesis
A testable version: "Coca-Cola's growth will stay more balanced than in 2022–24." Resolution rule: "In its fiscal 2027 results, Coca-Cola reports price/mix between +2% and +5% and unit case volume growth of at least +1%." Price/mix above 5% with flat or falling volume would mean growth is price-led again. Below 2% would mean mix or discounting is eating into growth. As of the second quarter of 2026, price/mix of +2% with volume up 4% for the half year sits inside the range.
Each quarterly release updates the view. Strong price/mix with rising volume supports the thesis; rising prices with falling volume is evidence of customer pushback. Watch three things in particular: whether Asia Pacific mix keeps pulling the average down, whether North American volume holds as pricing slows, and whether competitors' price cuts, like PepsiCo's in snacks, spread to drinks.
Common traps
- Inflation dressed up as pricing power. Big local-currency price rises can mean little in dollars. Ask how many points came from very high-inflation countries.
- List versus realized price. Announced increases mean little if promotions give them back.
- Mistaking mix for price. Mix can reverse fast when budgets tighten or, as in 2020, when channels close.
- Reading the average without the parts. Revenue per unit can fall while every price rises, if growth comes from cheaper regions or products. Look at segments.
- The delayed volume penalty. McDonald's customers pulled back well after the biggest price increases. One good quarter proves little, and a promotion-driven quarter proves less.
- Cost pass-through. Prices that only cover higher costs add no profit. Check gross margin.
- Comparing different definitions. "Price/mix," "effective net pricing," and "average check" are not the same measure. Read each company's definition before comparing.
- Shipment and calendar timing. Coca-Cola's concentrate sales can run ahead of or behind unit case volume, and extra or missing days can shift a quarter's growth by several points.[^20][^33]
- Assuming a price cut will pay for itself. A cut needs a large volume response to break even. PepsiCo's snacks gained volume after their 2026 cut, but revenue still fell.
Checklist
- How many points of growth came from price/mix in each of the last three to five years? Is that rising, stable, or falling?
- Which part is price and which is mix? Is the mix shift in product, package, channel, or geography?
- What happened to volume in the same periods, in total and in each segment?
- Given the company's margin per unit, how much volume could it lose before a price rise stops paying off, and did it lose more than that?
- Is the price realized after discounts, or only announced? Are promotions, value menus, or incentives growing?
- How much came from high-inflation markets, and how much was lost to currency?
- How does price/mix compare with competitors, using comparable definitions, and with management's forecasts?
- Is gross margin rising, showing that pricing is turning into profit? Does pricing stick after costs stop rising?
- Are there hidden price changes, such as smaller packs, or calendar effects that flatter a quarter?
Key takeaways
- Revenue grows from selling more units (volume) or earning more per unit (price and mix).
- Price is charging more for the same thing; mix is customers buying a richer or poorer combination of products, packages, channels, or regions. Mix can make an average fall even when every price rises.
- Price is a powerful profit lever, but customers respond. Research finds that brand sales fall on average about 2.6% for each 1% price rise, and that promotions rarely leave a lasting gain.
- Price-led growth often fades, as McDonald's and PepsiCo's snacks showed, while a company whose customers keep buying at higher prices, as Coca-Cola's did in North America, shows real pricing power.
- Ask three questions: is the contribution rising or falling, what is it costing in volume, and is it real and lasting?
- Always read price/mix alongside volume, currency, segment detail, and gross margin.
Data needed to support this thesis
To build and keep updating a price and mix growth thesis, you need the following data.
Required
| Data | What it tells you | Where to find it |
|---|---|---|
| Pricing disclosures | How much of growth came from price and mix, and how much from selling more | Results releases and earnings calls, where companies give a "price/mix," "effective net pricing," or "average selling price" line |
| Revenue bridge | How reported growth splits into volume, price and mix, currency, and acquisitions | The revenue bridge or organic growth table in results releases; the revenue discussion in annual reports (Form 10-K) |
Helpful
| Data | What it tells you | Where to find it |
|---|---|---|
| Product mix data | Whether customers are buying richer or cheaper products | Revenue by product or category in the segment note; commentary in results releases |
| Channel data | Whether sales are moving to higher-priced or lower-priced channels | Results releases and earnings calls; the revenue breakdown in filings |
| Competitor pricing | Whether the company can raise prices without losing customers to rivals | Competitors' results releases, company price lists, and consumer price data from statistics agencies |
The comparisons must be like-for-like. Currency swings, acquisitions, calendar days, and price rises in very high-inflation countries can all look like pricing power. Remove them, or use the company's own organic figures, before comparing periods. When comparing companies, check that their price and volume measures are defined the same way.
The thesis is usually updated by three kinds of events: earnings releases (new price and mix figures), pricing changes (announced increases, cuts, or promotions, such as PepsiCo's 2026 snack price cuts), and product launches (which can shift the mix). A typical horizon for checking the thesis is about a year and a half, long enough for customers' response to a price change to show up in volume.
In the Coca-Cola example, the required data was the company's price/mix line and its revenue bridge of volume, price/mix, and organic growth, from its earnings releases.[^27][^28][^29][^30][^31][^32][^20][^33] The helpful data was the company's commentary on channel and package mix in 2020 and 2021,[^28][^29] its segment detail on geographic mix, such as the unfavorable mix in Asia Pacific,[^33] and competitor pricing in the form of PepsiCo's effective net pricing and volume.[^21][^22][^23][^18]
[^1]: McDonald's, fourth quarter and full year 2023 results, Exhibit 99.1 to Form 8-K (February 5, 2024). SEC filing. [^2]: Joe Erlinger, "Providing meaningful value to our fans, with a side of facts," McDonald's (May 29, 2024). McDonald's; reported by CBS News, TODAY, and Restaurant Dive. [^3]: Nation's Restaurant News, "McDonald's confirms $5 Meal Deal, launching a summer pricing battle" (June 20, 2024). NRN. [^4]: McDonald's, second quarter 2024 results, Exhibit 99.1 to Form 8-K (July 29, 2024). SEC filing; first U.S. decline since 2020 per Restaurant Dive. [^5]: McDonald's, fourth quarter and full year 2024 results, Exhibit 99.1 to Form 8-K (February 10, 2025). SEC filing. [^6]: McDonald's, first quarter 2025 results, Exhibit 99.1 to Form 8-K (May 1, 2025). SEC filing. [^7]: NACS, "McDonald's Sees Dip in Low-Income Customers" (November 6, 2025), on the third-quarter 2025 earnings call. NACS. [^8]: McDonald's, fourth quarter and full year 2025 results, Exhibit 99.1 to Form 8-K (February 11, 2026). SEC filing. [^9]: McDonald's, second quarter 2026 results, Exhibit 99.1 to Form 8-K (August 4, 2026). SEC filing. [^10]: Michael V. Marn and Robert L. Rosiello, "Managing Price, Gaining Profit," Harvard Business Review (September–October 1992), Exhibit 1. HBR. [^11]: Financial Crisis Inquiry Commission, interview with Warren Buffett (May 26, 2010). FRASER. [^12]: Tammo H. A. Bijmolt, Harald J. van Heerde, and Rik G. M. Pieters, "New Empirical Generalizations on the Determinants of Price Elasticity," Journal of Marketing Research (2005). Journal; abstract. [^13]: Vincent R. Nijs, Marnik G. Dekimpe, Jan-Benedict E. M. Steenkamp, and Dominique M. Hanssens, "The Category-Demand Effects of Price Promotions," Marketing Science 20, no. 1 (2001): 1–22. Abstract. [^14]: Eric T. Anderson and Duncan I. Simester, "Price Stickiness and Customer Antagonism," Quarterly Journal of Economics 125, no. 2 (2010): 729–765. Abstract; MIT DSpace. [^15]: Bain & Company, Consumer Products Report 2024 press release (February 14, 2024). Bain. [^16]: Bain & Company, Consumer Products Report 2025 press release (February 12, 2025). PR Newswire. [^17]: Niels-Jakob H. Hansen, Frederik G. Toscani, and Jing Zhou, "Euro Area Inflation after the Pandemic and Energy Shock: Import Prices, Profits and Wages," IMF Working Paper 2023/131 (June 2023), covering 2022Q1–2023Q1. IMF; abstract checked via RePEc. [^18]: PepsiCo, fourth quarter and full year 2025 results, with definition of effective net pricing, Exhibit 99.1 to Form 8-K (February 3, 2026); fiscal year ended December 27, 2025. SEC filing. [^19]: Kari McNair, "Getting less for the same price? Explore how the CPI measures 'shrinkflation' and its impact on inflation," Beyond the Numbers, U.S. Bureau of Labor Statistics (February 2023). BLS. [^20]: Coca-Cola, fourth quarter and full year 2025 results, with definitions and 2026 outlook, Exhibit 99.1 to Form 8-K (February 10, 2026). SEC filing. [^21]: PepsiCo, fourth quarter and full year 2022 results, Exhibit 99.1 to Form 8-K (February 9, 2023); fiscal year ended December 31, 2022. SEC filing. [^22]: PepsiCo, fourth quarter and full year 2023 results, Exhibit 99.1 to Form 8-K (February 9, 2024); fiscal year ended December 30, 2023. SEC filing. [^23]: PepsiCo, fourth quarter and full year 2024 results, Exhibit 99.1 to Form 8-K (February 4, 2025); fiscal year ended December 28, 2024. SEC filing. [^24]: PepsiCo, first quarter 2026 results, Exhibit 99.1 to Form 8-K (April 16, 2026); 12 weeks ended March 21, 2026. SEC filing. [^25]: PepsiCo, second quarter 2026 results, Exhibit 99.1 to Form 8-K (July 9, 2026); 12 weeks ended June 13, 2026. SEC filing. [^26]: PepsiCo, "PepsiCo makes iconic snacks more affordable ahead of Super Bowl" (February 3, 2026). PepsiCo; reported by CNN. [^27]: Coca-Cola, fourth quarter and full year 2019 results, Exhibit 99.1 to Form 8-K (January 30, 2020). SEC filing. [^28]: Coca-Cola, fourth quarter and full year 2020 results, Exhibit 99.1 to Form 8-K (February 10, 2021). SEC filing. [^29]: Coca-Cola, fourth quarter and full year 2021 results, Exhibit 99.1 to Form 8-K (February 10, 2022). SEC filing. [^30]: Coca-Cola, full year 2022 results and 2023 outlook (February 14, 2023). SEC filing. [^31]: Coca-Cola, full year 2023 results and 2024 outlook (February 13, 2024). SEC filing. [^32]: Coca-Cola, full year 2024 results and 2025 outlook (February 11, 2025). SEC filing. [^33]: Coca-Cola, second quarter 2026 results and updated 2026 outlook (July 28, 2026); six months ended July 3, 2026. SEC filing.