PepsiCo Cuts Chip Prices as Shoppers Seek Affordability | NPR

PepsiCo is responding to consumer complaints about high prices by cutting costs and lowering prices on many of its popular snack foods, including Lay’s, Doritos, Cheetos, and Tostitos, by as much as nearly 15%. The price reductions are set to begin rolling out this week, ahead of the Super Bowl, according to a statement released by the company on Tuesday.

The move comes as shoppers increasingly seek value and turn to store brands amid persistent inflation. PepsiCo CEO Ramon Laguarta noted that affordability is a major barrier preventing lower- and middle-income consumers from purchasing more of the company’s products.

PepsiCo’s decision is part of a broader strategy developed in agreement with activist investor Elliott Investment Management to improve the company’s North American food business. The plan includes eliminating approximately 20% of its product lineup in the U.S. By early 2026.

“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., in a statement. “People shouldn’t have to choose between great taste and staying within their budget.”

The company reported a 1% decline in North American food volume sales in its latest quarterly report, despite overall sales growth. This suggests consumers are becoming more price-sensitive and are either reducing their purchases or switching to cheaper alternatives.

PepsiCo isn’t just focused on price reductions. The company is also innovating with new products, such as Doritos with added protein and Lay’s chips flavored with avocado or olive oil. It also plans to release a low-sugar Gatorade without artificial ingredients and revamp its Quaker marketing to highlight the fiber and whole grains in its oats.

General Mills, another major food manufacturer, announced similar plans last year to discount roughly two-thirds of its product offerings, including Cheerios and Nature Valley bars. Both PepsiCo and General Mills have emphasized that ultimate pricing decisions rest with retailers.

According to data from the USDA’s Economic Research Service, food-at-home prices are forecast to increase by 2.3% in 2026, a slight improvement from the previous year, but still a continuation of price increases that began during the COVID-19 pandemic. However, this represents a significant decline from the four-decade high inflation rates seen during the pandemic.

The recent price increases have been driven in part by rising commodity costs, with coffee and ground beef prices up 18.8% and 14.9%, respectively, over the past year, according to Labor Department statistics. Prices for candy, chewing gum, bananas, lettuce, and cereals have also increased.

The moves by PepsiCo and General Mills reflect a broader trend among consumer packaged goods (CPG) companies to address affordability concerns and reignite growth. While addressing price is important, General Mills CEO Jeffrey Harmening stated in September that innovation and new product development are also crucial for long-term growth.