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Key Takeaways
- Pepsi is lowering the prices of some snacks as part of a new strategy hashed out with activist investor group Elliott Investment Management.
- The soda and snack giant is one of several food manufacturers and merchants talking about rolling back prices.
Shoppers are turning up their noses at pricier provisions. That pushback is prompting some major players to regroup.
PepsiCo (PEP) is the latest food and staples seller to announce price cuts. Sales improved where the New York-based company tested lower price points with retailers, who gave its snacks more shelf space, CEO Ramon Laguarta said on a conference call Tuesday.
Activist investor Elliott Investment Management had a hand in creating Pepsi’s new strategy. Pepsi unveiled a strategy to improve its U.S. performance and lift its stock, lowering prices but also attempting to lure shoppers with more natural snacks and reducing costs by cutting 20% of its product lineup.
Why This News Matters to Consumers
Even with price cuts, it’s unclear whether food and beverage prices will end up lower. Inflation remains above regulators’ targets, and many businesses have yet to pass on the full cost of tariffs, according to analysts.
“We’re choosing to invest in everyday values or reset the price, the consumer prices, from our key brands,” Laguarta said, according to a transcript made available by AlphaSense.
Pepsi didn’t respond to Investopedia’s request for details about price and selection cuts in time for publication. The announcement from the maker of Cheetos and Sabra dips comes after a number of food manufacturers and merchants publicized selective price rollbacks, including General Mills (GIS), Walmart (WMT), Target (TGT) and Kroger (KR).
Customers stopped buying everything from cashews to cereals after price increases, companies have said. Many are trying to find ways to save as concerns about the job market and inflation mount. Producers, such as Campbell’s (CPB), want to help customers stick to a budget, while passing along some of the cost of tariffs, CEO Mick Beekhuizen said.
Higher prices put pressure on “ready to serve” soups, a category that had already grown out of favor with some consumers, Beekhuizen said on a conference call Tuesday. Yet condensed soups, broths and creams sold well because customers often use them to cook, a common strategy for saving money.
“Value is important when it really matters,” Beekhuizen said, according to a transcript. “So going into the soup season, we have taken selective incremental actions in order to make sure that we are competitive in the marketplace.”
