PepsiCo has finally moved to cut snack prices after a bag of its chips hit highs of $7 in some stores.
Over the past several years, PepsiCo steadily increased prices across its Frito-Lay division, which produces Doritos, Lay’s and Cheetos. The strategy helped boost revenue during a period of inflation driven by higher costs for ingredients, packaging and transportation. The increases added up, however, the Associated Press reports.
Brand executives were well aware that rising snack prices had become a problem as sales at its Frito-Lay division began to slide, according to Bloomberg. Bags of chips climbed to more than $7 in some cases, and at Walmart, Doritos prices surged nearly 50 percent since 2021, according to consumer data firm Attain.
Walmart responded by cutting back shelf space for Frito-Lay products, shifting room to its own lower-cost store brand and PepsiCo’s rivals like Takis, Bloomberg reports. Despite that pressure, PepsiCo did not immediately lower prices, allowing the sales slump to deepen.
By February, PepsiCo began reversing course, announcing price cuts of up to 15 percent on some snacks and shifting its strategy to focus on larger, better-value bag sizes for top brands like Doritos and Cheetos, Bloomberg reports. The decision came after mounting financial strain, with Frito-Lay missing internal revenue targets by more than $1 billion for two consecutive years, people familiar with the situation told the outlet.
PepsiCo began testing price cuts in select markets in the second half of last year. The company is expected to know by this summer whether the reductions are “enough,” PepsiCo CEO Ramon Laguarta said in February, The Associated Press reported. Preliminary tests conducted in select cities last year produced a “pretty good” increase in sales volume, he added at the time.
The company’s decision to lower prices has also led to tangible benefits in stores, securing, on average, a double-digit increase in shelf space at major retailers such as Walmart, Costco and Target. PepsiCo expects these expanded placements to be fully implemented by the end of April, Laguarta said.
A PepsiCo spokesperson declined Bloomberg’s request for comment on this story.
Before the newly implemented measures, analysts estimated that PepsiCo’s prices rose far faster than overall grocery costs, climbing roughly 40 percent since 2020, compared with about 25 percent for food prices more broadly.
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Beyond cutting prices, PepsiCo is also rethinking its overall game plan to get sales back on track. In December 2025, the company said it would shrink its product lineup by about 20 percent, focusing more on its biggest, best-selling brands while cutting down on less popular items. At the same time, it’s investing more in promotions and tweaking package sizes to make its snacks feel like a better deal for shoppers.
These changes are part of an agreement with activist investor Elliott Investment Management, which has pushed PepsiCo to simplify its business and improve performance, the Associated Press reports.
Despite challenges, PepsiCo’s financial results remain strong, with adjusted earnings of $2.26 per share in the fourth quarter and net income up to $2.54 billion.
