PepsiCo has announced plans to reduce prices on its flagship brands, including Lay’s and Doritos, by as much as 15% in the United States. This decision follows feedback from consumers about the growing strain on their budgets and comes despite the company exceeding market expectations in its fourth-quarter results. The move is part of a broader strategy to rein in costs and adapt to changing consumer needs in a challenging economic environment.
Listening to Consumers
During a recent statement, Rachel Ferdinando, CEO of PepsiCo Foods U.S., highlighted the importance of consumer feedback in shaping the company’s pricing strategy. “We’ve spent the past year listening closely to consumers, and they’ve told us they’re feeling the strain,” she remarked. This acknowledgement resonates with the experiences of many American consumers who have faced rising living costs, exacerbated by factors such as inflation and disruptions to food assistance programmes.
The price reductions will apply to a variety of popular products, including Lay’s, Tostitos, Doritos, and Cheetos. The decision is a response to “extensive consumer feedback around affordability limitations” gathered in the latter half of 2025. This initiative reflects a growing trend among consumer goods companies, including P&G and Coca-Cola, which are reevaluating their pricing structures to better serve budget-conscious shoppers.
Streamlining Operations
In addition to the price cuts, PepsiCo is undertaking a comprehensive review of its product lineup, aiming to reduce the number of items offered in the U.S. by approximately 20% this year. The company has also closed several manufacturing facilities and implemented job cuts as part of its cost-cutting measures. These actions are in response to pressure from activist investor Elliott Management and the need to address a series of weak sales in the North American market.
Despite these challenges, PepsiCo has maintained its annual forecast for core earnings per share growth, projecting an increase of 5% to 7%. However, the company’s shares experienced a slight dip of about 1% in premarket trading and have fallen approximately 5% throughout 2025, trailing behind rival Coca-Cola in market performance over the past five years.
Adapting to Consumer Trends
PepsiCo is also adapting to changing consumer preferences by rebranding key products to align with demands for cleaner ingredients. This shift comes amid an increasing focus on health and wellness, influenced by the popularity of weight-loss medications and broader health initiatives. The company’s beverage segment is undergoing a transformation, introducing new offerings such as prebiotic sodas and a range of low- and zero-sugar drinks.
In its latest earnings report, PepsiCo revealed a revenue figure of $29.34 billion for the quarter ending December 27, surpassing the anticipated $28.97 billion. The company reported core earnings per share of $2.26, slightly exceeding estimates of $2.24, signalling a resilient performance in a challenging market.
Why it Matters
PepsiCo’s decision to reduce prices reflects a significant shift in strategy aimed at addressing the financial pressures faced by consumers. As inflation continues to impact household budgets, this move could enhance brand loyalty and market share, particularly in the competitive snack and beverage sectors. By responding proactively to consumer concerns and streamlining operations, PepsiCo positions itself to navigate the evolving landscape of consumer preferences while maintaining financial stability. This approach not only supports its immediate sales objectives but also strengthens its long-term brand equity in the North American market.
