PepsiCo is responding to consumer pressure and shifting economic realities by cutting prices on a range of its most popular snack foods, including Lay’s, Doritos, Cheetos and Tostitos. The price reductions, , come as shoppers increasingly trade down to store brands or reduce their consumption of discretionary items like chips amid persistent inflation.
The company announced it will lower suggested retail prices by up to nearly 15% on many of its chip brands, a move intended to boost sales and regain customers. This decision follows a year of listening to consumer feedback, according to Rachel Ferdinando, CEO of PepsiCo Foods U.S. “We’ve spent the past year listening closely to consumers, and they’ve told us they’re feeling the strain,” Ferdinando said in a statement. “People shouldn’t have to choose between great taste and staying within their budget.”
The price cuts are strategically timed ahead of the Super Bowl, a peak season for snack food sales. PepsiCo is hoping to capture a larger share of the market as consumers prepare for Super Bowl parties. Specifically, the recommended everyday price of 8-ounce bags of Lay’s Classic Potato Chips will decrease from $4.99 to $4.29.
This move is part of a broader effort by PepsiCo to improve its North American food business. Last month, the company announced plans to lower prices and reduce its product lineup by a fifth, following an agreement with activist investor Elliott Investment Management. The company’s brands also include Gatorade and Quaker Oats.
PepsiCo isn’t alone in responding to consumer affordability concerns. General Mills, the maker of Cheerios and Betty Crocker, also announced last year plans to discount roughly two-thirds of its offerings. These actions reflect a growing trend among food manufacturers to address consumer sensitivity to price increases.
The price reductions come as demand for PepsiCo’s drinks and snacks has begun to slip. While the company has not released specific sales figures, the move suggests a recognition that maintaining premium pricing is no longer sustainable in the current economic climate. The company is aiming to provide value to consumers without altering the size, quality, or taste of its products.
PepsiCo emphasized that the price reductions are not a short-term promotion but a “long-term commitment” to providing more value. This suggests the company anticipates continued economic pressure on consumers and is positioning itself to remain competitive. The company is rolling out the new lower suggested prices across the United States this week.
The decision to cut prices also comes after years of food companies raising prices following the pandemic, betting on consumer brand loyalty. However, the shift towards store-brand options and reduced consumption indicates that this strategy has reached its limits. Consumers are actively seeking more affordable alternatives, forcing major brands to reassess their pricing strategies.
While the full impact of the price cuts remains to be seen, they represent a significant response to changing consumer behavior and a challenging economic landscape. PepsiCo’s move could potentially influence other food and beverage companies to follow suit, leading to a broader trend of price adjustments in the snack food industry.
