PepsiCo Slashes Chip Prices Up to 15% to Win Back Consumers

PepsiCo is taking aggressive action to win back price-sensitive consumers with substantial discounts on its most beloved snack brands. The company announced price reductions of up to 15% on popular products including Lay’s, Doritos, and Flamin’ Hot Cheetos, marking a significant shift in the snack industry’s pricing strategy.

Savings That Add Up for Consumers

An 8-ounce bag of Lay’s classic potato chips will drop from $4.99 to $4.29, while a 9.25-ounce bag of Doritos will fall approximately 80 cents to $5.49. These reductions come after customers flooded the company with complaints about affordability. According to Jefferies analysts, retail prices for salty snacks were roughly 38% higher in June 2024 compared to 2020—a stark reminder of the inflation challenges facing consumers across multiple categories.

Addressing the Cost Crisis

PepsiCo CEO Ramon Laguarta acknowledged that snack prices had become “a little more expensive than we would like it to be.” However, the company isn’t absorbing these costs entirely. The price cuts are funded through strategic operational changes, including the closure of three manufacturing plants and the elimination of several product lines. This dual approach allows PepsiCo to reduce consumer prices while maintaining profitability through efficiency improvements and portfolio streamlining.

The move signals recognition by major CPG companies that sustained price increases have reached a breaking point for consumers. As competitors monitor these developments, the snack industry may be entering a new competitive phase focused on price sensitivity and value proposition.