PepsiCo on Tuesday announced price cuts of up to 15% on its core snack brands, including Lay’s and Doritos, responding to growing consumer resistance after multiple rounds of price hikes in the US market. The revised prices are expected to hit store shelves this week.
The move comes as US consumers grapple with persistent inflation, rising living costs and delays in food stamp benefits, prompting major consumer goods companies to reassess pricing strategies to protect volumes and market share. Rivals such as Procter & Gamble and Coca-Cola have also lowered entry price points in recent months.
“We’ve spent the past year listening closely to consumers, and they’ve told us they’re feeling the strain,” said Rachel Ferdinando, CEO of PepsiCo Foods U.S., underscoring affordability as a key concern for households.
PepsiCo’s decision follows a better-than-expected fourth-quarter performance, even as packaged food companies face a tougher outlook amid changing consumption patterns and the growing adoption of appetite-suppressing weight-loss drugs. The company said affordability has emerged as the “biggest cause for friction” in the snacks category, particularly among low- and middle-income consumers.
CEO Ramon Laguarta said PepsiCo is leaning heavily on portion control to keep its snack portfolio relevant. More than 70% of the company’s US food offerings are now in single-serve formats, while multipacks across food and beverages are expected to play a critical role in driving growth.
Alongside pricing actions, PepsiCo is refreshing key brands such as Quaker, Gatorade, Lay’s and Tostitos, with a sharper focus on low-sugar formulations and products free from artificial ingredients to appeal to younger families.
The company said the “surgical” price cuts are aimed at restoring volume growth in its North America snacks business during the current year. PepsiCo maintained its annual forecast of 5% to 7% growth in core earnings per share, which it had outlined in December.
For the quarter ended December 27, PepsiCo reported revenue of $29.34 billion, surpassing market expectations of $28.97 billion, according to LSEG data. Core earnings per share came in at $2.26, slightly ahead of estimates. The company’s shares rose nearly 4% in early trading following the results.
PepsiCo is also pursuing an aggressive cost-cutting programme amid pressure from activist investor Elliott Management and several quarters of subdued sales in its key North American market.