Demand for PepsiCo Snacks Wanes as US Consumers More ‘Value-Conscious’

A woman grabs a bag of Doritos chips in a shop in Perth, Western Australia, on March 17, 2024. (Susan Mortimer/The Epoch Times)

Sales of PepsiCo snack products declined across North America in the second quarter, prompting the company to consider adjusting the prices of its offerings.

North American revenues from PepsiCo’s Frito-Lay snack brand posted a decline in Q2 this year, compared to the 14 percent growth in the same quarter last year, the company said in a July 11 report. PepsiCo blamed the situation on rising prices.

“The impacts of persistent inflationary pressures and higher borrowing costs over the last few years have resulted in tighter household financial conditions,” the company said.

Demand for snacks is “subdued and consumers have become more value-conscious with their spending patterns and preferences across brands, packages, and channels.”

The Frito-Lay brand covers a host of well-known snack items such as Lay’s, Cheetos, Doritos, Fritos, and Cracker Jack.

There are now consumers who want “more value to stay with our brands,” PepsiCo chairman Ramon L. Laguarta said during the company’s earnings call.

Mr. Laguarta specifically pointed to unsalted snack products such as potato chips and tortilla chips as requiring “some value reset and value intervention for some consumers.”

“There is some value to be given back to consumers after three or four years of a lot of inflation,” he said.

The average price for a 16-ounce bag of potato chips rose from $4.49 in January 2020 to $6.56 in June 2024, an increase of 46 percent, according to data from the Federal Reserve Bank of St. Louis.

PepsiCo said it intends to offer a “broad array of price tiers” for its products across flavors, packages, and channels as it sets a “clear agenda” to address the shifting preferences of consumers.

PepsiCo also saw an 18 percent revenue decrease in its Quaker Foods brand in North America. The company attributed the decline primarily to product recalls and certain inflationary pressures. The firm expects the impacts of these factors on revenue to moderate this year.

In December 2023, Quaker recalled several batches of granola bars and cereals due to concerns that the products could be contaminated by Salmonella bacteria known to sometimes cause fatal infections among children.

Despite seeing subdued snack sales, PepsiCo reported a 0.8 percent overall net revenue growth in Q2 this year compared to the same period in 2023, according to a July 11 press release.

America’s savory snacks market is estimated to grow by 4.7 percent annually between 2023 and 2027, according to a report from Agriculture and Agri-Food Canada (AAFC), a department of the Canadian government.

The agency expects higher inflation rates to affect discretionary spending by customers.

The top savory snack brand in the United States was Lay’s, followed by Doritos and Cheetos in 2022. All the three brands are owned by PepsiCo.

While the snacks market is predicted to grow, there are concerns about the health consequences of snacking. American adults are estimated to consume an average of 400–500 calories per day through snacks alone.

One study calculated that fruits and vegetables made up only 5 percent of the calories from snacks. Most of the consumed snacks were found to be low in fiber and high in sugar. Snacking has been linked to a higher risk of obesity.