PepsiCo introduces ‘surgical’ price strategy amid softening demand for snacks

The insight: PepsiCo expects growth to be muted in 2025 as demand for salty snacks and sugary drinks moderates after years of gains.

• Q4 sales volumes fell at all three of its North America divisions—Frito-Lay, Quaker, and PepsiCo Beverages—by 3%, 6%, and 3% YoY, respectively. That was the fifth-straight quarter of declines in the North America market.
• The CPG giant forecasts low-single-digit revenue growth this year, in line with the 2% YoY increase in organic revenues it reported for fiscal 2024.

Consumers want value: Pepsi CEO Ramon Laguarta attributed the snack category’s sluggish performance to consumers’ focus on value.

The company plans to introduce more variety in snack sizes, including more single-serve items and smaller multipacks, to broaden its appeal to shoppers of all budgets.

• This “surgical” approach allows it to offer customers cheaper options without lowering prices, which the company was adamant it wouldn’t do in the coming year.
• Merely giving shoppers the option to save money by buying less is unlikely to help Pepsi blunt the appeal of private-label brands, which are rapidly gaining share thanks to improvements in quality and their attractive price points.
• But the company is confident that its investments in innovation, as well as a wider selection of mini meals that appeal to Gen Z’s eating habits, will contribute to a gradual sales recovery in North America this year.

GLP-1s make their mark: Like other CPG giants, Pepsi is keeping a close eye on GLP-1 adoption, which could be a major disruptor to its business.

• Households with at least one GLP-1 user cut grocery spending by roughly 6% within the first six months of starting the medication, according to a study by Cornell University and Numerator.
• Chips and other savory snacks saw a particularly steep decline—down 11.1%, more than any other category—as did soft drinks, which was down 6.6%.

So far, Pepsi has noticed “very little impact in our business and our category” from GLP-1 usage, per Laguarta. But discourse around those drugs is boosting consumers’ interest in health and wellness, which in turn is fueling demand for healthier snacks.

• Pepsi is in the process of adjusting its portfolio to include more high-protein options, particularly in the fast-growing beverage space, as well as a variety of whole grain, lower-fat, and lower-sodium products.
• It’s not the only one: Nestlé’s first major US brand launch in nearly three decades targets GLP-1 users and others looking to manage their weight with products like protein-enriched pizzas and protein shots.

Our take: Food companies face a variety of headwinds in 2025. While inflation is easing, consumers who traded down to cheaper brands are showing little inclination to reverse course—and that resolve will likely only be strengthened should tariffs drive grocery prices up.

CPGs like Pepsi must therefore find ways to appeal to shoppers on grounds other than price—for instance, by offering more “functional” foods that tie into health and wellness trends or through mini meals that satisfy consumers’ desire for convenience.