PepsiCo to cut U.S. prices on Lay’s and Doritos by up to 15 per cent
PepsiCo will lower prices on core snack brands in the U.S. after consumer feedback on affordability. The move comes amid cost cuts, weaker North America sales and investor pressure.
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By Torontoer Staff
PepsiCo said on Tuesday it will reduce prices on core snack brands in the United States, including Lay’s and Doritos, by as much as 15 per cent. The company cited "extensive consumer feedback around affordability limitations" and said the new prices will appear on shelves this week.
The announcement accompanied fourth-quarter results that marginally beat estimates and comes as PepsiCo pursues a broad cost-cutting plan, trims its product line and responds to competitive pressure from private labels and rival beverage makers.
What PepsiCo is changing
PepsiCo will lower entry price points on select, high-volume snack SKUs in the U.S. by up to 15 per cent. The company said the changes reflect feedback gathered over the past year about consumer affordability and will take effect in the second half of 2025, with new shelf prices rolling out immediately.
- Price reductions of up to 15 per cent on core brands such as Lay’s and Doritos
- Plans to cut roughly 20 per cent of product SKUs in the U.S. this year
- Manufacturing plant closures in the snacks division and workforce reductions as part of broader cost savings
Why PepsiCo is changing course
The company said consumers reported affordability limits after a string of price increases. PepsiCo, like other large consumer-packaged-goods firms, has been under pressure as U.S. households cope with inflation and disruptions that affected access to benefits for some shoppers.
We’ve spent the past year listening closely to consumers, and they’ve told us they’re feeling the strain.
Rachel Ferdinando, CEO of PepsiCo Foods U.S.
PepsiCo is also responding to activist investor pressure and several quarters of weak sales in its key North America market. The company has accelerated efficiency measures while shifting its product portfolio to focus on higher-margin items and fewer SKUs.
Recent initiatives from activist make sense to us and believe changes need to be made for the long-term health of the business. However, we see most corrective actions as likely causing EPS dilution in the near term.
Nik Modi, analyst at RBC Capital Markets
What this means for shoppers and competitors
Lower entry price points are designed to keep shoppers who are trading down to private labels or smaller pack sizes for budget reasons. Grocery retailers, including Walmart and Kroger, have expanded private-label ranges and priced them to attract cost-conscious customers.
Rivals are also adjusting offerings. Coca-Cola has introduced 7.5-ounce single-serve cans of some sodas in U.S. convenience stores at around US$1.29, aiming to lower the immediate price barrier for buyers.
- More aggressive private-label competition from major grocers
- Smaller pack sizes and lower-priced single-serve options from rivals
- Continued focus by PepsiCo on reformulating and rebranding key products for cleaner ingredient profiles
Financial backdrop
PepsiCo reported revenue of US$29.34 billion for the quarter ended Dec. 27, surpassing estimates of US$28.97 billion. Core earnings per share for the quarter were US$2.26, slightly above the US$2.24 consensus.
The company maintained its full-year outlook for core EPS growth of 5 per cent to 7 per cent, a forecast it first issued in December. However, volumes in its North America food business have slipped. Food volumes fell 1 per cent in the fourth quarter, after a 4 per cent decline in the prior quarter.
PepsiCo’s shares have trailed some rivals over the last five years and were down about 1 per cent in premarket trading on the day of the results. Management expects the portfolio rationalization and cost actions to improve long-term profitability, even if some measures weigh on near-term earnings.
What to watch next
Retail and industry watchers will be monitoring how broadly PepsiCo applies the price cuts, which SKUs are affected and whether competitors respond with their own price moves or more small-pack SKUs. The company’s execution on SKU rationalization and plant closures will also affect margins and supply chain dynamics.
PepsiCo is simultaneously refreshing beverage offerings, including low- and zero-sugar lines and a prebiotic soda, while repositioning snacks like Lay’s and Tostitos to reflect consumer demand for cleaner ingredients.
The price reductions are likely to be welcomed by budget-conscious shoppers in the near term. The bigger question for the business is whether lower entry prices and a slimmer product range will restore volume growth without eroding long-term profitability.
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