Junk food lovers, rejoice.
PepsiCo plans to slash prices by as much as 15% on snacks like Lay’s potato chips, Doritos and Flamin’ Hot Cheetos to counter inflationary price hikes.
The company said Tuesday the new suggested retail prices will begin rolling out across the US this week.
“We’ve spent the past year listening closely to consumers, and they’ve told us they’re feeling the strain,” said Rachel Ferdinando, chief executive of PepsiCo US. “Lowering the suggested retail price reflects our commitment to help reduce the pressure where we can.”
The company told The Wall Street Journal it has received an overwhelming volume of emails and voicemails from cash-strapped customers complaining that high prices were making it difficult to satisfy their munchies.
Food companies have hiked prices in the wake of steep inflation. Snack brands, in particular, have raised prices and banked on customers remaining loyal to their favorite chips and sodas.
But for everyday consumers, prices appear to be getting out of control. Retail prices for salty snacks were about 38% higher in June 2024 compared to the previous year, according to Jefferies analysts.
In December, food prices were 3.1% higher than they were a year earlier, according to the Consumer Price Index.
“It became a little more expensive than we would like it to be,” PepsiCo CEO Ramon Laguarta told the Journal.
PepsiCo execs said snack prices have climbed in line with inflation, but sales growth has stalled.
Retailers are the ones who set prices, but PepsiCo has the ability to set suggested retail prices – and it’s hoping sellers will follow their lead and lower prices to win over inflation-battered consumers.
According to its new suggestions, an 8-ounce bag of Lay’s chips could drop from $4.99 to $4.29, according to the Journal report.
The suggested retail price for a 9.25-ounce bag of Doritos would fall about 80 cents to $5.49.
Steep prices have pushed shoppers to turn to cheaper alternatives and store brands, especially as they face other pressures like the housing affordability crisis.
In 2024, US sales of store-brand products jumped nearly 4% to a record $271 billion, according to the Private Label Manufacturers Association.
PepsiCo plans to sell its snacks in new packaging that will advertise that the bags are the same size at a lower price.
It’s just the latest push for growth from PepsiCo since it reached an agreement with activist investor Elliot Investment Management in December.
The snack-and-beverage giant has also scrapped artificial colors and flavors from its snacks in line with Health Secretary Robert F. Kennedy Jr.’s “Make America Healthy Again” campaign.
It is selling classic Lay’s chips in new bags that prominently read “made with real potatoes,” though the recipe is unchanged, in hopes it will attract healthy eaters.
The company also plans to boost marketing for brands like Lay’s, Tositos, Gatorade and Quaker that emphasizes simpler ingredients, and offer new products focused on protein, fiber and hydration.
Ferdinando told The Journal that PepsiCo has been able to adjust prices and focus on affordability by finding places to cut costs internally. The company recently shuttered three manufacturing plants and cut several product lines altogether.
It showed some signs of improvement in the most recent quarter, including a jump in savory and salty retail sales. PepsiCo’s beverage business also stood out with strong revenue growth.
