PepsiCo will raise prices on Doritos and other popular snacks and drinks following a slump in North American sales, the company announced.
The price adjustments — driven by rising costs for fuel, aluminum and agricultural commodities — will be single-digit percentage increases. Despite the hikes, product prices will still be lower than at the start of the year.
Doritos, Ruffles, SunChips and some sodas are all expected to see increases, though the exact amount was not revealed.
Although PepsiCo previously offset higher expenses using a $178 million U.S. government tariff refund issued after the Supreme Court invalidated President Donald Trump’s far-reaching global tariffs, the company confirmed those funds would not carry over into later quarters.
To adjust for the softer domestic sales, the company reduced its full-year earnings expectations to between 2.5 percent and 3.5 percent adjusted growth per share, down from a prior estimate of 5 percent to 7 percent. Total revenue growth for the full year is now projected at 6 percent.
Raising prices poses serious risks for U.S. companies when so many American families are already financially strained. During 2022 and 2023, PepsiCo enacted eight consecutive quarters of double-digit percentage hikes to counter post-pandemic inflation.
In response to dropping sales volumes, activist firm Elliott Investment Management acquired a $4 billion stake in the company last fall and pushed for cost reductions. PepsiCo then lowered prices on Lay’s, Doritos, Cheetos and Tostitos by up to 15 percent earlier this year.
Chief Executive Ramon Laguarta said lower pricing brought back some shoppers, but sales in Canada remained weak. Domestic Frito-Lay snack volumes were flat year-over-year for the July-September period, while North American beverage volumes dropped 2 percent.
“We don’t feel good about the beverage business,” Laguarta said on a conference call, adding, “We’re putting all the urgency of the business and the focus in improving our performance in soft drinks.”
Despite weaker North American sales, PepsiCo reported a 17 percent rise in third-quarter net income to $3.07 billion, while revenue grew 5.6 percent to $25.27 billion, beating Wall Street expectations of $24.95 billion.
Growth was driven by international markets, which account for 41 percent of total revenue. Global snack volumes rose 4 percent — the fastest pace since 2021 — led by strong demand in China, Brazil and the broader Asia-Pacific region.
Demand grew fastest for protein-enhanced items and simple-ingredient lines, including Gatorade Lower Sugar and Doritos free of artificial colors or flavors. Adjusted earnings reached $2.34 per share, topping the $2.29 predicted by analysts.
The Associated Press contributed to this report
