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Conway Gittens: Pepsi is hoping that by going smaller with some of its snack and drink offerings it will see bigger sales. The company is looking for a recovery after fourth-quarter sales dropped to $27.78 billion, which missed Wall Street estimates.
The parent company of Frito-Lay, Doritos, Quaker Oats, Pepsi, and Mountain Dew is battling consumer concerns on two fronts. First of all, shoppers are still upset over the price hikes of the past few years and are looking for bargains when they shop. That’s especially true in North America where volumes declined as average prices rose 3 percent last quarter . With that in mind, Pepsi is experimenting with more value packs, which offer smaller size drinks or smaller size snacks, which are bundled at a value price.
Related: Pepsi sued by FTC over controversial law infringement
But the other change prompting PepsiCo to offer new portion sizes has to do with the rise of GLP-1 weight loss drugs. Pepsi CEO Ramon Laguarta told investors he’s noticed more conversations on social media about food, snacking, and health and wellness. “Probably, the Number 1 solution for consumers to stay in our category is small portions of our favorites; ideally, improve favorites with lower sodium and lower fat and artificial ingredients. So portion control of our favorites is a big strategy.”
But weight-loss drugs aren’t just impacting the size of the snacks and drinks. Pepsi is focusing on snacks that are packed with healthier alternatives like proteins and whole grains. It’s looking to leverage brands like Sun Chips and products within the Quaker Oats family to meet that trend.
Turning to Tuesday’s market action, tech stocks traded higher on better-than-expected quarterly results and an optimistic AI spending outlook from Palantir. Meanwhile, shares of Estee Lauder slumped after the beauty company said it was cutting 7,000 jobs to offset a drop in sales.
That’ll do it for your Daily Briefing. From the New York City, I’m Conway Gittens with TheStreet.
