<\/p>\n
Frito-Lay\u2019s Flamin\u2019\u00a0Hot Cheetos are pictured near the front door of La Azteca Market in South Los Angeles. The Plano-based maker of salty snacks\u00a0controls nearly 60% of the U.S. market, which gives it more power to set pricing.<\/p>\n
Reed Saxon\/AP<\/p>\n
PepsiCo Inc.\u2019s chips prices had gotten too high. Walmart Inc. had been telling the maker of Doritos, Lay\u2019s, Cheetos and many other beloved snacks that was the case for more than a year.<\/p>\n
<\/p>\n
Executives at PepsiCo knew it, too. Sales at Plano-based Frito-Lay, the company\u2019s snacks powerhouse, were plunging. Some of its chips cost more than $7 a bag; at Walmart, Doritos prices had jumped nearly 50% from 2021, according to Attain, which tracks consumer spending data.<\/p>\n
Article continues below this ad<\/p>\n
Yet, even when Walmart cut Frito-Lay\u2019s shelf space\u00a0\u2014 giving it to its own cheaper, in-house brand and competitors like Takis\u00a0\u2014 price tags didn\u2019t go down.<\/p>\n
Finally, in February PepsiCo announced it would slash prices by up to 15% on some salty snacks. By then, Frito-Lay had missed internal revenue targets for two years in a row by over a billion dollars, according to people familiar with the matter.<\/p>\n
But now that a plan to bring prices down is in motion, new challenges have emerged that threaten to blunt its impact.<\/p>\n
Make Dallas News a preferred source so your search results prioritize writing by actual people, not AI.<\/p>\n
<\/p>\n Add Preferred Source<\/p>\n <\/a><\/p>\n With the war in Iran sending oil prices soaring, consumers under even more economic pressure may not be lured back by PepsiCo shaving less than a dollar off a snack bag. And depending on how long the conflict lasts, higher food and packaging costs could eat into the company\u2019s margins.<\/p>\n Article continues below this ad<\/p>\n Before the war, the price cuts were \u201cprobably enough\u201d to lure customers and boost PepsiCo\u2019s revenues, said Nik Modi, co-head of global consumer and retail research at RBC Capital Markets. \u201cBut now what?\u201d<\/p>\n A spokesperson for PepsiCo declined to comment on this story.<\/p>\n PepsiCo Chief Executive Officer Ramon Laguarta said at a conference in February that the company will know by this summer if the cuts are \u201cenough.\u201d Tests in select cities last year generated a \u201cpretty good\u201d boost in volume, he said on a separate call with investors that month. By agreeing to lower prices, the company secured, on average, a double digit increase in shelf space at major retailers like Walmart, Costco and Target. It expects those changes to be in full force by the end of this month, Laguarta said.<\/p>\n The company will monitor how much it\u2019s selling and how it\u2019s doing against competitors, but it hasn\u2019t publicly disclosed specific targets.<\/p>\n Article continues below this ad<\/p>\n Losing market share\u00a0<\/p>\n Executives at PepsiCo had been debating what to do about the pricing issue since at least as far back as 2024, when\u00a0Frito-Lay\u2019s revenues turned negative, according to people familiar with the matter. Nobody wanted to be responsible for a short-term revenue blow dealt by slashing prices, according to the people, who asked not to be named discussing internal matters. So the company tried anything else that might lure customers: promotions, shrinkflation. None of it worked.<\/p>\n When Rachel Ferdinando took the helm of the company\u2019s U.S. foods division at the start of 2025, she decided to do a deep dive into its business, according to a person familiar with the matter. Her findings were clear: Prices had to come down.<\/p>\n Meanwhile, pressures were mounting. Frito-Lay\u2019s revenues, which had risen for 53 quarters in a row \u2014 or more than 13 years \u2014 were falling. PepsiCo was losing market share to cheaper private-label brands. And, other packaged food companies, like Conagra Brands Inc. and General Mills Inc. were already lowering their prices.<\/p>\n Article continues below this ad<\/p>\n Meetings with retailers like Walmart, which wanted the snack maker to address concerns about affordability as soon as possible, became tense, according to people familiar with the matter.<\/p>\n At PepsiCo\u2019s headquarters in New York, Laguarta\u2019s mind was on other priorities, too. Americans were increasingly choosing healthier options. Laguarta pushed the company to lean harder into more protein and fiber-rich foods, which tend to cost even more than chips. He was also working on opening a Lay\u2019s-branded restaurant in Spain.<\/p>\n In September, with the company\u2019s stock down more than 20% from a peak in 2023, Elliott Investment Management took a $4 billion stake in the company with a list of demands, including making its products more affordable.<\/p>\n By the year\u2019s end, PepsiCo announced it planned to lower prices and in February it laid out how: Up to 15% off some snacks, with a focus on larger bag sizes for some of its most popular brands, including Doritos and Cheetos. Laguarta described the cuts as \u201cvery surgical.\u201d It also underwent a series of cost cutting measures, including layoffs.<\/p>\n Article continues below this ad<\/p>\n With the company\u2019s market value down more than $50 billion since 2023, lower prices started showing up in stores at the beginning of this year.<\/p>\n At a Walmart in Washington, D.C., in late March, bags of\u00a0Cheetos Simply NKD were stacked in a prime spot at the end of the aisle, where more people walk by. A large, red sign advertised their \u201crollback\u201d price: $3.97 down from $4.43.<\/p>\n Price matters<\/p>\n Retired D.C. resident Lee Jones said she doesn\u2019t buy chips often but put a bag of organic blue corn Tostitos in her cart at Walmart because they were on sale and labeled organic. \u201cPrice does matter,\u201d she said.<\/p>\n Article continues below this ad<\/p>\n All sorts of Frito-Lay brand chips were marked down at El Caribe Liquor Market in El Monte, Calif. As of March,\u00a0Amar Singh, its owner, said he hadn\u2019t yet noticed an increase in sales. There, a large bag of Ruffles was selling for $5.49, down 80 cents.<\/p>\n \u201cSales have been down a lot since last year,\u201d he said, attributing it not just to high prices but immigration raids and other fears. \u201cPeople are just spending less money.\u201d<\/p>\n The guiding mantra at PepsiCo\u2019s snacks division had been \u201cFrito-Lay Five Forever.\u201d The goal was to grow Frito-Lay\u2019s revenue by 5% year after year and, for decades, that\u2019s about how the snack-maker did.<\/p>\n Frito-Lay was PepsiCo\u2019s cash cow, generating money for the beverage division to spend, employees said. Unlike PepsiCo\u2019s soda brands, which have to contend with Coca-Cola\u2019s dominance, Frito-Lay owns the land of salty snacks. It controls nearly 60% of the U.S. market, according to RBC Capital Markets, which gives it more power to set pricing.<\/p>\n Article continues below this ad<\/p>\n During the pandemic\u00a0\u2014 like all food companies\u00a0\u2014 PepsiCo raised prices to manage costs associated with supply chain and labor issues. At first, consumers, flush with stimulus dollars and with little more to do than sit at home and snack, didn\u2019t blink. But what started as modest increases turned into double digit jumps. By the third quarter of 2022, net pricing was up 20% from a year earlier.<\/p>\n Frito-Lay Five Forever was no more: Revenue growth skyrocketed into the double digits for the next two years. Internally, bonuses were flowing, according to people familiar with the matter.<\/p>\n \u201cThe Frito business is the jewel of PepsiCo,\u201d Laguarta said on an investor call in early 2023, noting it had the highest margins of any unit within the company. \u201cNo matter what happens with the consumer, we\u2019re going to be, I think, the preferred choice.\u201d<\/p>\n But out in the world, shoppers started balking at the cost of a bag of chips.<\/p>\n Article continues below this ad<\/p>\n \u201cI pulled back somewhat,\u201d said Denton Malcom, a business consultant living in Washington, D.C., who enjoys\u00a0Doritos, Tostitos and Ruffles\u00a0\u2014 but not at any cost.<\/p>\n Customers and shelf space<\/p>\n When sales started slipping in 2023, some employees raised concerns about prices getting too high and hikes happening too often. But even when revenue started falling, senior managers made clear they didn\u2019t want to go backward on prices, according to people familiar with the matter<\/p>\n Instead, PepsiCo tried other tactics to keep costs down and lure shoppers back. It put fewer chips in bags and offered short-term deals. It unveiled cheaper multipacks with fewer bags. It also rolled out new versions of snacks without artificial colors, as well as higher-protein and fiber options, hoping to win over the health-conscious crowd.<\/p>\n Article continues below this ad<\/p>\n In both 2023 and 2024, Laguarta predicted Frito-Lay\u2019s volumes would rebound.<\/p>\n \u201cWe have been working different tactics to give the consumer what they want and we see that it\u2019s working,\u201d he said on a call in mid-2024.<\/p>\n That year, revenue at Frito-Lay turned negative for the first time in over a decade. By then, the company wasn\u2019t just losing customers but shelf space in stores, including the most coveted displays at the end of aisles. Internally, some employees winced as the prices of some chips surpassed $7.<\/p>\n A year later, in 2025, Ferdinando\u2019s review made clear that PepsiCo had to cut prices. In the second half of the year, the company tested the move in some markets. The broader rollout started in early 2026 and is still underway.<\/p>\n Article continues below this ad<\/p>\n Seeing its volume declines, the company should\u2019ve cut prices earlier, said Nicholas Fereday, a food industry analyst. \u201cPepsiCo, like many, assumed consumers would suffer the rises and only now appreciates how important \u2018affordability\u2019 is to the typical consumer.\u201d<\/p>\n Now, the message from executives is that PepsiCo is all in on value.<\/p>\n By signing up, you agree to our Terms Of Use<\/a> and acknowledge that your information will be used as described in our Privacy Policy<\/a>.<\/p>\n \u201cConsumers have been clear: Affordability has never mattered more,\u201d Ferdinando, the head of PepsiCo\u2019s U.S. Foods division, said at a conference in March. \u201cTrust is built when consumers feel that companies, and big companies especially, understand their reality.\u201d<\/p>\n Article continues below this ad<\/p>\n At a Safeway supermarket in Washington, D.C., family-size bags of\u00a0Doritos and Tostitos in April were selling for as low as $2.49, if bought in multiples of three.<\/p>\n A party-size bag of restaurant-style Tostitos was still sitting on the shelf for $7.29.<\/p>\n","protected":false},"excerpt":{"rendered":"Frito-Lay\u2019s Flamin\u2019\u00a0Hot Cheetos are pictured near the front door of La Azteca Market in South Los Angeles. The…\n","protected":false},"author":2,"featured_media":241078,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[160,162,161],"class_list":["post-241077","post","type-post","status-publish","format-standard","has-post-thumbnail","category-plano","tag-plano","tag-plano-headlines","tag-plano-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/posts\/241077","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/comments?post=241077"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/posts\/241077\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/media\/241078"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/media?parent=241077"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/categories?post=241077"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/tags?post=241077"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"image\"](\"https:\/\/www.newsbeep.com\/us-tx\/wp-content\/uploads\/2026\/04\/1775016909_917_rawImage.jpg\" "\\"#\\"")
<\/p>\n