STORY: Shares of PepsiCo rose Tuesday after the company said it will cut prices by up to 15% on core brands such as Lay's and Doritos starting this week.
The move comes after a consumer backlash against several previous price hikes, with the CEO of Pepsi's U.S. Foods division saying its customers are "feeling the strain."
Rival Coca-Cola and consumer giant Procter & Gamble have also lowered prices to safeguard market share amid still-elevated inflation and delayed food stamp benefits for lower-income families.
Packaged food companies are also in for a reckoning this year as the popularity of appetite suppressing weight-loss drugs increases and brands look for ways to keep consumers interested in snacks and sodas.
Pepsi's CEO said that portion control was the way to keep PepsiCo's categories relevant, adding that more than 70% of the company's U.S. food product line was in single-serve packages, a strategy he said was "critical" for growth.
The company is also refreshing key brands such as Quaker, Gatorade and Tostitos to focus on low sugar or no-artificial-ingredients to attract younger households with children.
Meanwhile, Pepsi is in the midst of an aggressive cost-cutting plan across its entire business after pressure from activist investor Elliott Management, and several quarters of weak sales in the key North America market.
PepsiCo, Inc. is one of the worldwide leaders in producing non-alcoholic beverages and snacks. Net sales break down by area of activity as follows:
- North America (60%): sale of beverages (50.3% of net sales; sodas, concentrated juices, water, tea and coffee-based beverages; Aquafina, Diet Mountain Dew, Diet Pepsi, Gatorade, Gatorade Zero, Mountain Dew, Pepsi, Propel brands, etc.), snacks (44.9%; chips, tortillas and pretzels; Lay's, Doritos, Tostitos, Cheetos, Fritos, Ruffles, etc.), and cereals (4.8%; ready-to-eat cereals, rice, wheat, etc.);
- Europe (15.1%): sale of snacks (Cheetos, Chipita, Doritos, Lay's, Ruffles and Walkers brands) and beverages (7UP, Diet Pepsi, Lubimy Sad, Mirinda, Pepsi and Pepsi Max);
- Latin America (12.8%): sales of snacks (Cheetos, Doritos, Emperador, Lay's, Mabel, Marias Gamesa, Ruffles, Sabritas, Saladitas and Tostitos brands) and beverages (7UP, Gatorade, H2oh!, Manzanita Sol, Mirinda, Pepsi, Pepsi Black, San Carlos and Toddy);
- Africa/Middle East/South Asia (6.8%): sale of snacks (Chipsy, Doritos, Kurkure, Lay's, Sasko, Spekko and White Star brands) and beverages (7UP, Aquafina, Mirinda, Mountain Dew and Pepsi);
- Asia/Pacific/Australia/New Zealand (5.3%): sale of snacks (BaiCaoWei, Cheetos, Doritos, Lay's and Smith's brands), beverages and syrups (7UP, Aquafina, Mirinda, Mountain Dew, Pepsi and Sting).
Net sales are distributed geographically as follows: the United States (56.3%), Mexico (7.8%), Russia (4.2%), Canada (4.1%), China (3%), the United Kingdom (2.2%), South Africa (2%), Brazil (1.9%) and other (18.5%).
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