The Pepsi pivot from health foods back to chips and soda

The Pepsi pivot from health foods back to chips and soda
While consumers will tell you they want to eat healthier, what they actually want to do is eat potato chips.
Pepsi has been gradually making snacks and drinks more healthy by lowering sodium, saturated fat, and sugar in its products, all without consumers noticing.
At Pepsi, there is a sensory panel composed of 10 professional food tasters that meet several times a week to sample PepsiCo’s latest attempts at healthier junk food.
Pepsi has been trying to reduce the sodium content of Lay’s potato chips without consumers noticing. Approaches to this include new salt crystals, salt substitutes, different potato varieties, and different combinations of herbs and spices. However, similar efforts to cut sodium at Campbells soup ended up with the company reversing their efforts. While I think consumers may note the calorie content of a bag of Doritos, I’m not sure they are looking at things like sodium or fat content.
The previous CEO, Indra Nooyi, tried to shift the snacks and soda portfolio toward healthier offerings like Naked Juice, Sabra hummus, and KeVita kombucha. Product launches that had little success included TrueNorth nuts, midcalorie Pepsi Next and Müller Quaker yogurt.
The current CEO, Laguarta, has increased the marketing budget, built new manufacturing for salty snacks, expanded the energy drink business, and increase R&D into new snack variations like mini Doritos and Cheetos Mac and Cheese.
PepsiCo’s annual revenue rose by 34% between 2018 and 2022, to $86 billion, though in some categories its market share has slipped.
Pepsi was doing zero based budgeting which required managers to justify their expenses annually. The result was that the company was underinvesting in North American snacks business.
When Pepsi reported earnings in July, the results showed strong growth in both sales and profits despite price increases and increased advertising expenses. Consumers seem willing to pay up more for snacks and sodas. Revenue increased more than 10% in the last quarter. North American snacks increased 14%. The North American beverage unit increased 10%.
Works Cited:
https://www.wsj.com/articles/pepsi-pep-q2-earnings-report-2023-2f9d2b0
https://www.wsj.com/articles/pepsi-lays-doritos-soda-sugar-fat-salt-health-62047e07?mod=saved_content
https://www.wsj.com/articles/twinkies-doritos-trix-snacks-get-tiny-80f1fb1d?mod=article_inline
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