PepsiCo may be stuffing more snacks into packages to meet consumer demand for greater value, but it’s also taking a more measured approach to advertising in the year ahead -- while continuing to invest significantly in promoting its biggest brands.
The company celebrated a positive reception to Lay’s packaging changes, reversing years of “snackflation” to increase the number of chips per package by around 20%, and adding two or three extra bags to variety packs. According to PepsiCo, the changes introduced last quarter contributed to a 3% increase in household penetration for the period for Lay’s. PepsiCo announced it would be rolling out similar changes across more brands in the struggling Frito-Lay’s portfolio, including Doritos, Ruffles, and Tostitos.
Also, “You will see Tostitos and Doritos big brand events around the NFL,” PepsiCo CEO Ramon Laguarta said during an earnings call with investors. “You will see Lay's play in some of the classic ‘Do Us a Flavor’ events. So, the brands will have a combination of value and big brand events.”
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PepsiCo also previously announced the return of the popular “Doritos Crash the Superbowl” program.
PepsiCo’s earnings report for the third quarter included the news that the company was downgrading its 2024 revenue forecast, predicting a “low single-digit” increase in organic revenue growth after previously forecasting 4% organic growth for 2024. The company cited factors including “subdued category trends in North America,” ongoing impacts from a recall of Quaker products for potential salmonella contamination, and “business disruptions from ongoing geopolitical tensions in certain international markets.”
The call also came on the heels of PepsiCo announcing its acquisition of Siete to boost its portfolio of what it calls “permissible” or “positive choice” brands providing healthier alternatives to traditional snack varieties.
Among the steps necessary to build growth for the portfolio, Laguarta said in the earnings call, was ensuring “visibility is at the levels that it needs to be to generate trial.” He explained that the company would “be very intentional with where we invest money behind these brands," adding, “The fact of the matter is that, today, with digital advertising and all the information and insights that we have, we can be much more precise and thoughtful and have much higher returns on how we build these platforms.”