PepsiCo on Tuesday exceeded analysts’ expectations for both earnings and revenue, helped by gains in organic sales across several segments of the business.
Still, demand for PepsiCo’s snacks has softened as consumers push back against higher prices, a trend most visible in North America. The company reported volume declines across its food business, including a 2% drop globally for the quarter, as inflation-weary shoppers cut back on snacks and beverages.
In response, PepsiCo plans to lower prices this year on select snack products, including brands such as Lay’s, Doritos, Tostitos and Cheetos, with some reductions reaching as much as 15%. Executives said the moves are aimed at improving affordability, competitiveness and purchase frequency, particularly among low- and middle-income consumers. The company expects productivity savings to help offset the impact of the price cuts.
Alongside pricing changes, the company is refreshing several core brands with simpler ingredients and updated packaging, while also expanding into categories such as functional beverages, whole grains, protein and fiber to re-engage consumers.
PepsiCo said it has been inundated with messages from budget-conscious customers frustrated by rising prices, underscoring the strain higher food costs continue to place on consumers. Food prices in December were up 3.1% from a year earlier, according to Consumer Price Index data.
While retailers ultimately control shelf prices, PepsiCo sets suggested retail prices and is counting on retailers to follow suit as it pushes for lower prices to attract inflation-weary shoppers.
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