PepsiCo to Cut Prices of Lay's, Doritos as Consumers Push Back

PepsiCo Reduces Prices on Lay's and Doritos Amid Consumer Pressure

PepsiCo's Strategy to Address Consumer Concerns

By Juveria Tabassum

Feb 3 (Reuters) - PepsiCo will cut prices on core brands such as Lay's and Doritos by up to 15% following a consumer backlash against several previous price hikes, the snacks and beverage maker said on Tuesday after it topped fourth-quarter results.

As U.S. consumers struggle to afford essentials due to inflation and delayed food stamp benefits, companies such as P&G, Coca-Cola and PepsiCo have lowered entry price points to safeguard market share.

Impact of Inflation on Consumer Behavior

"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. The new prices will be on shelves this week.

Focus on Portion Control and Brand Refresh

Packaged food companies are also in for a reckoning this year as the adoption of appetite suppressing weight-loss drugs increases and brands look for ways to keep consumers interested in snacks and sodas.

Portion control was the way to keep PepsiCo's categories relevant, said CEO Ramon Laguarta, adding that more than 70% of the company's U.S. food product line was in the single-serve capacity.

"We are betting a lot on portion control. Our multi pack both in foods and beverages is going to be a very critical lever for us to grow," Laguarta said.

PepsiCo is also refreshing its key brands such as Quaker, Gatorade, Lay's and Tostitos to focus on low sugar or no-artificial-ingredients to attract younger households with children to buy snacks and cereal.

Financial Performance and Market Outlook

Still, affordability was "the biggest cause for friction" against higher spending in the snacks category for low- and middle-income consumers at this time, PepsiCo said. It expects its "surgical" price cuts to help return the North America snacks category to volume growth this year.

PepsiCo on Tuesday stuck to its annual forecasts of core earnings per share growth of 5% to 7% that it provided in December. Its shares rose 2% in early trading. They fell about 5% in 2025 and have lagged rival Coca-Cola over the last five years.

The company is also in the middle of an aggressive strategy to cut costs across its business after pressure from activist investor Elliott Management, and several quarters of weak sales in the key North America market.

"The quarter was pretty strong and likely signals that trends may be headed in a better direction for Pepsi," said David Wagner, head of equity and portfolio manager at Aptus Capital Advisors, which holds PepsiCo shares.

"But for the stock to really get working, there needs to be execution that relies on several drivers such as innovation, price cuts, productivity."

The Gatorade maker reported revenue of $29.34 billion for the three months ended December 27, beating estimates of $28.97 billion, according to data compiled by LSEG. Its quarterly core earnings per share of $2.26 edged past estimates of $2.24.

(Reporting by Juveria Tabassum in Bengaluru; Editing by Arun Koyyur)