PepsiCo says Americans want healthier snacks

When it comes to food, Americans are turning over a new leaf more to leaves – and it’s denting PepsiCo’s sales.

The food-and-beverage giant last week reported Q4 results showing demand in North America has slowed for its salty snacks and drinks, as consumers continue to pay attention to their budgets and gravitate towards healthier options.

• North American sales at the Pepsi-owned Frito-Lay (home to brands like Doritos and Tostitos), which, at $7.3 billion, accounts for about a quarter of PepsiCo’s total revenues, fell 3%. It marks the fifth consecutive quarterly decline in Frito-Lay’s North American sales.
• Beverage sales in North America also fell 3% in the quarter.

PepsiCo execs attribute the declines in part to inflationary pressures. But another driving factor, per execs, is that consumers are gravitating away from Frito Pies and Mountain Dew and focusing more broadly on health and wellness.

In response: The company is leaning into healthier options, and plans to further bulk up its sales by packing protein into existing products. Its Quaker Oats division, for example, now offers cereals with additional protein.

👀 Looking ahead…As Americans remain cautious with their pocketbooks, and the MAHA movement and weight-loss drugs continue to gain steam, more companies could hop aboard the healthier snacks train. Researchers at Cornell SC Johnson College of Business late last year found that households with at least one person on a weight-loss drug such as Ozempic saw “significantly larger decreases in purchases of calorie dense, processed items, including an 11 percent decline in savory snacks.”