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PepsiCo plans to cut prices on some of its snack foods as consumers become more “price conscious.”
The food and beverage giant, which oversees Fritos, Doritos and its namesake cola, Prepare comments on second quarter results Ongoing inflation and rising borrowing costs have put financial strain on American households, which PepsiCo said have led consumers to “become more value-conscious in their spending patterns and preferences across brands, packages and channels.”
Ramon Laguarta — PepsiCo CEO, He told analysts The price of certain products, such as salt-free foods, Foods like potato chips and tortilla chips will need to be tweaked to make them more appealing to consumers, and some products will see increased levels of marketing. At the same time, other products will also be Permitted offerings, e.g. Sun Chips Brands like Pop Corner are growing and the consumers who buy these brands are not concerned with value.
“After three or four years of significant inflation, there is value to be given back to consumers.” “SParts of the portfolio need revaluation. I don’t think the entire portfolio needs to be reset.”
As cash-strapped consumers look for ways to save, many are cutting back on spending. That has spread to food and beverage companies, which have seen volumes decline nearly across the board. In the most recent quarter, PepsiCo cut its organic Frito-Lay North America sales down 4%.
Several retailers, including Target, Kroger and Aldi, Price reduced This is to attract consumers to the store and increase their desire to purchase products.
Still, food items have risen in price by 25% since 2021, despite recent improvements in government inflation data. According to Fortune.
“We need new entry price points and perhaps new promotional mechanisms for certain consumers.” Laguarta said.
TD Cowen analyst Robert Moskow pointed to a line PepsiCo management has repeatedly stated. The view is that the fundamental situation for salty snacks remains unchanged and that current challenges are the result of “temporary value perceptions and difficulties in year-over-year comparisons.” Moskow says The sector is likely to remain under pressure in the coming months.
“We expect the slowdown in overall snack sales to continue through 2025 due to consumer discretionary category cuts and a continued return to office-working patterns,” he said in a research note. “As a result, we [low-single digit] FLNA’s growth [the second half of 2024] And so until 2025.”
