PepsiCo to Cut Chip Prices by Up to 15% Ahead of Super Bowl

PepsiCo is set to reduce prices on its popular chip brands, including Lay's, Doritos, Cheetos, and Tostitos, by up to 15%. This significant pricing adjustment will begin rolling out this week, strategically timed just ahead of the Super Bowl.

Responding to Consumer Strain

The company indicated that this move is a direct response to consumer feedback regarding higher prices and broader market trends. Many major food companies are currently observing consumers adjusting their food budgets following prolonged periods of sustained inflation. This shift has led some consumers to opt for store-brand alternatives or forgo certain items altogether. Previously, food companies had increased prices post-pandemic, relying on established consumer brand loyalty.

Rachel Ferdinando, CEO of PepsiCo Foods U.S., stated that the company has listened to consumers who are experiencing financial strain.

Strategic Overhaul and Market Trends

This price reduction is an integral part of PepsiCo's broader strategic initiatives. These also include plans to reduce its overall product lineup by a fifth, aiming to boost sales. This comprehensive strategy was developed in agreement with activist investor Elliott Investment Management to enhance its North American food business performance.

Another major food producer, General Mills, similarly announced last year its intention to discount approximately two-thirds of its product offerings. Both companies have noted that while they set wholesale prices, retailers ultimately determine the final in-store pricing for consumers.

Financial Performance and Future Innovations

PepsiCo's recent financial report revealed a 1% decrease in the volume of food items sold in North America during the latest quarter, despite achieving overall sales growth.

CEO Ramon Laguarta informed investors that affordability was a significant factor impacting purchasing decisions among low- and middle-income consumers for branded products.

Looking ahead, PepsiCo is also actively exploring new food trends. This includes introducing Doritos with protein and Lay's chips made with avocado or olive oil. Additionally, the company plans to release a low-sugar Gatorade without artificial ingredients and update Quaker marketing to highlight the fiber and whole grains in its oats products.