Pepsico’s promise to slash Prices on its salty snacks has kept investors sweet.
Shares in the US conglomerate surged to a 16-month high of $170.49 (up 10.6%) in the week after it pledged to cut prices on core US brands, including Doritos and Lay’s, by up to 15%.
“We’ve spent the past year listening closely to consumers, and they’ve told us they’re feeling the strain,” said PepsiCo Foods US CEO Rachel Ferdinando. “Lowering the suggested retail price reflects our commitment to help reduce the pressure where we can.”
Like many major brand owners, PepsiCo has chased growth by hiking prices in recent years. Yet sequential rises have hit volumes, which fell 2% in its North American food business in 2025.
In late summer 2025, activist investor Elliott Investment Management made a high-profile intervention in the company’s affairs, calling out six consecutive quarters of falling sales in the domestic snacks division – formerly a growth powerhouse.
Mondelez has likewise had to balance price hikes against faltering volumes. In Q4 results released the same week, the confectioner reported a 4.8% decline in volumes alongside a 9.9% jump in prices.
Pepsi’s decision was hard to avoid given shoppers’ increasing resistance to inflation, according to AJ Bell head of markets Dan Coatsworth.
But he stressed the decision to cut prices “won’t have been taken lightly”.
“A 2% decline in volumes in the company’s convenient foods category, extending a trend that was evident throughout last year, ultimately left management with limited choice,” he said.
Such significant price cuts will have to be funded by the business. While PepsiCo plans a “record year of productivity savings” to fund growth, investors will watch their impact on margins carefully, Coatsworth added.
“PepsiCo, which is having its feet held to the fire by Elliott Management, will look to limit the impact on margins by cutting costs,” he said.
“The longer-term fear for investors will be the drop-off in demand is not just being driven by price but also by shifting consumer habits, as the increasing proliferation of weight-loss drugs and a broader preference for healthier eating diminishes demand for treats and snacks.”
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