PepsiCo to raise some chip prices after cutting them earlier this year

PepsiCo PEP-Q is set to raise prices for some chips to keep pace with inflation, a spokesperson for the company said, as the Lay’s maker works to revive sales in the United States.

PepsiCo is navigating shifting consumer preferences toward healthier snacking, weak demand from households pressured by rising fuel prices and higher commodity costs this year.

In February, PepsiCo cut prices by up to 15 per cent on products including Lay’s and Doritos after customer backlash against several rounds of previous price hikes.

The fresh round of price hikes will be implemented for some chip brands in the low- to mid-single-digit percentage range, which was in line with inflation, a spokesperson for PepsiCo told Reuters.

The new prices will be lower than they were before the price cuts earlier this year, and the company is trying to maintain lower prices where it can, the spokesperson added.

Prices are expected to go up on products including grocery-store-sized bags of chips from brands such as Doritos and Ruffles, and some sodas by the end of this year or in early 2027, according to a report by Bloomberg, which first reported the hikes, citing people familiar with the matter.

Analysis: PepsiCo under pressure to show results from turnaround drive

Activist investor Elliott Investment Management, which disclosed a roughly US$4-billion stake in PepsiCo last year, has pushed the company to reinvigorate its soda business, boost its share price and explore selling non-core food assets.

Elliott did not immediately respond to a Reuters request for comment.

PepsiCo shares, which have fallen nearly 10 per cent so far this year, dipped about 1 per cent in morning trading.

Several food and beverage companies have been contending with rising packaging and logistics costs as the Iran war keeps oil prices elevated.

In its latest earnings report, PepsiCo warned of higher commodity costs in the second half of the year and posted a 2-per-cent drop in second-quarter sales in its North American food business, although it kept its annual forecast intact.

The company also said in July that high gas prices had dented consumer demand more than it had anticipated.

Volumes in PepsiCo’s North America business have been negative through this year, despite the price cuts and CEO Ramon Laguarta’s plan to review its North America supply chain, which was announced in December.

With North America unlikely to recover this year despite PepsiCo’s efforts, “everything is likely ’in play’ for Elliott to dial up activism,” said BNP Paribas analyst Kevin Grundy in a note on Wednesday.