PepsiCo expected to increase prices on small chip bags, report says

Dr. Pepper ties with Pepsi for 2nd best-selling drink in US

There's been a shakeup in the Cola wars with second place becoming more competitive. (Credit: KDFW)

PepsiCo is preparing to raise prices on some of its smaller bags ​of chips due to higher expenses in ‌the U.S., Bloomberg News reported on Wednesday.

According to Bloomberg News, citing a PepsiCo spokesperson, the planned increases were prompted by higher production, distribution ​and retail expenses in the U.S., ​and are not a direct response to ⁠the Iran war, which has caused ​gas prices to surge.

PepsiCo plans to increase prices on products, report says

Big picture view:

The company is planning to hike prices by 10 to 20 cents on ​certain single-serve bags, the report said. ‌Smaller ⁠bags, often sold as two for $1, are also expected to be priced higher, the report added.

An increase would also apply ​to a ​limited number ⁠of single-serve products beginning in late June, the report also ​said, citing a company spokesperson.

PepsiCo Inc.'s FritoLay Lay's branded potato chips at a supermarket in Latham, New York, US, on Friday, Feb. 2, 2024. (Credit: Angus Mordant/Bloomberg via Getty Images)

PepsiCo did not ​immediately ⁠respond to FOX Local’s request for comment.

PepsiCo’s decision contrasts previous actions

Dig deeper:

This news contrasts PepsiCo’s previous decision to lower prices in the first quarter, which boosted demand for its snacks and drinks.

The company reported stronger-than-expected quarterly results, with both revenue and profit rising.

Revenue jumped 8.5% to $19.44 billion in the January-March period compared to the same period a year ago, the Purchase, New York, company said. That handily beat Wall Street’s forecast of $18.95 billion, according to analysts polled by FactSet.

EARLIER: Pepsi price cuts drive sales jump: What to know

PepsiCo said its efforts to improve affordability were beginning to resonate with shoppers.

PepsiCo’s CEO Ramone Laguarta called its decision a "holistic transformation of the business."

"Price was one element. We thought that consumers needed more value given the economic situations," PepsiCo’s CEO told FOX Business on Thursday, adding, "We’re pleased with the execution of our pricing strategy." 

PepsiCo increased prices amid COVID-19 pandemic

The backstory:

PepsiCo leaned heavily into price increases to combat inflation in the aftermath of the COVID-19 pandemic. The company hiked prices by double-digit percentages for eight straight quarters in 2022 and 2023 before settling into more moderate price increases.

That took a toll on sales. Consumers stopped buying Frito-Lay snacks or shifted to cheaper store brands.

But PepsiCo began cutting prices on value brands like Chester’s and Santitas last spring to win back customers. Then, last September, activist investor Elliott Investment Management took a $4 billion stake in the company and began pressing for further price cuts and other changes. PepsiCo agreed to accelerate its price cuts late last year.

In February, ahead of the Super Bowl, PepsiCo slashed U.S. prices on Lay’s, Doritos, Cheetos and Tostitos chips by up to 15%. At a Michigan Walmart on Thursday, a 9.25-ounce bag of Doritos was advertising a price rollback to $3.97, down from $4.48.