In a recent earnings report, PepsiCo’s snack unit Frito-Lay revealed a decline in revenue for its second quarter, marking a significant change after several quarters of price hikes. The company attributed this drop to the impact of years of inflation on household finances, leading to a shift in consumer behavior towards more budget-friendly options.
As a response to these challenges, Frito-Lay is considering cost-cutting measures and increasing promotions for its range of brands, including popular snacks like Cheetos, Lay’s, Doritos, and Smartfood. Despite a slowdown in inflation, American consumers are still feeling the effects of higher prices, particularly in everyday items like snacks.
The trend of price cuts has been observed among major retailers in recent months, reflecting a trend towards more cautious spending by consumers. Data from the Federal Reserve shows that the average price of potato chips has risen from $5.09 in June 2020 to $6.56 in June 2024.
PepsiCo chairman and CEO Ramon Laguarta acknowledged the need to give back value to consumers after years of inflation, suggesting that certain products may receive price adjustments to offer more affordable options. Laguarta emphasized the company’s focus on providing value to customers, with plans to offer broader price tiers and increase marketing efforts for cheaper products.
Overall, Frito-Lay is looking to adapt to the changing preferences of consumers and provide more value across its product portfolio. With a commitment to offering affordable options and responding to consumer feedback, the company aims to maintain its position in the competitive snack market.
