PepsiCo to raise some prices after cuts failed to grow sales

PepsiCo's Doritos chips. (Sergio Flores/Bloomberg)

PepsiCo Inc. is raising prices on some chips, soda and dips just months after pledging to make its snacks more affordable. 

The company is expected to increase the prices on grocery-store-sized bags of chips, including Doritos and Ruffles, which had been cut earlier this year, according to people familiar with the plans. The price increases, which will extend to other brands, including SunChips, are expected to go into effect at the end of this year or early 2027, according to the people, who asked not to be named because they are not authorized to speak publicly. 

READ MORE: Doritos Hit $7 a Bag, and It Cost PepsiCo Billions

The prices of certain chips will go up by a low-to-mid single-digit percentage, aligned with inflation, a spokesperson for PepsiCo said, adding that the new prices will be lower than where they were prior to the price cut earlier this year. The company is still working to maintain lower prices where it can and remains committed to its affordability effort, the spokesperson said. 

PepsiCo is under pressure to grow sales in North America, but heightened costs and an increasingly strained U.S. consumer are challenging its efforts. The prices of its chips, in particular, have come into focus after the company lost shelf space because they had gotten too expensive.

In February, PepsiCo said it was cutting prices by as much as 15% for key chip brands in a bid to boost sales that had faltered after prices got too high, with some chips topping $7 a bag. But the company saw a 2% decline in revenue in its North American food business and flat volume in its most recent earnings in July. PepsiCo CEO Ramon Laguarta said the consumer was under more strain than expected, due to higher gas prices. 

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Laguarta 

PepsiCo is also raising prices this week on some dips, including extra-large and extra-extra large jars of Tostitos salsa and Fritos canned dips, according to a memo viewed by Bloomberg News. At Dollar General stores, the extra-large Tostitos salsa jars are now priced at $4, up from $3.80, while the extra-extra large jars are now $5.50, up from $4.95. The Fritos canned dips increased to $3.75 from $3.30. 

The company is additionally expected to increase prices on some sodas and has warned some retailers of the upcoming price hikes, according to people familiar with the matter. 

PepsiCo declined to comment specifically on price increases impacting dips and soda, but said it was balancing low prices with the company’s long-term finances.

Other food companies, including Campbell’s Co. and Conagra Brands Inc., have said they are raising prices in the face of a sustained increase in energy and fertilizer costs, as well as tariffs on imports.

 Earlier this month, the Bureau of Labor Statistics reported the consumer price index rose 0.4% in August, adding to concerns that inflation isn’t abating.

Retailers ultimately decide how much of a company’s price increases they want to absorb and when, weighing a range of factors including market competition and consumer demand. Kroger Co. has stopped selling Red Bull energy drinks and Boar’s Head deli items at many stores because the grocery chain isn’t accepting their price hikes.

Laguarta said in February that the company negotiated double-digit increases in shelf space at stores along with the price cuts.

PepsiCo ranks No. 2 on the Transport Topics Top 100 list of the largest private carriers in North America.