PepsiCo announced Tuesday it will reduce snack prices by up to 15% after a year-long listening tour revealed the shocking discovery that customers find their products "too expensive," a concept the company's executive team had apparently never encountered before.
"I've spent the past year listening closely to consumers, and they've told us they're feeling the strain," said PepsiCo Foods US CEO Rachel Ferdinando, describing a research methodology also known as "leaving the house occasionally."
The price cuts arrive just in time for the Super Bowl, when Americans traditionally gather to complain about grocery prices while spending $47 on party-size bags of chips they could have bought for $38 last year, or $29 three years ago. The new prices represent PepsiCo's commitment to "help reduce the pressure where we can," though the company notes retailers will still set the final price, "so what you see in-store may vary" — corporate speak for "we've done our part, now it's someone else's problem."
The change comes after activist investor Elliott Management built a $4 billion stake in PepsiCo and delivered what sources describe as a devastating PowerPoint presentation titled "What If People Actually Bought Our Products Though."
"We ran some numbers," explained one Elliott analyst, "and discovered that when Doritos cost roughly the same as artisanal sourdough, consumers make different choices. Mainly the choice to buy store-brand tortilla chips that taste 91% as good for half the price."
Tests of the new pricing showed consumers "expressed enthusiasm," which in corporate research terminology means "didn't actively throw produce at the focus group moderator."
To complement the price rollback, PepsiCo is also launching trendier products including Doritos with protein, fiber-filled popcorn, and Lay's chips made with avocado and olive oils—a clear signal that the company remains committed to charging premium prices for things that sound vaguely healthy but aren't.
The announcement has sent shockwaves through the broader snack industry, with competitors nervously eyeing their own pricing strategies and wondering if they too should consider the radical notion of customers actually buying their products.