Global food giants that had been using rising raw material prices and supply chain disruptions as a pretext to constantly swap out price tags have finally started to wave the white flag. PepsiCo, the world's largest food and beverage corporation, said on the 3rd that it will cut prices by up to 15% for its flagship snack products Doritos, Cheetos, and Lay's.
The food industry took this as a sign that consumers exhausted by high inflation have reached a tipping point where they are shutting their wallets. Some also called it a symbolic case signaling a new normal in which corporations, to survive, give up profitability and move to defend market share (volume).
PepsiCo's decision stems from a deep sense of crisis. On the surface, its fourth-quarter 2025 report card was decent. Revenue came in at $29.3 billion (about 40 trillion won), beating market expectations. Net income also surged 67% to $2.54 billion from the same period in 2024.
But a closer look shows revenue didn't rise because it sold more products; it was thanks to the price effect. Volume, which shows how much was sold, fell from before. Last year, PepsiCo's North America foods volume fell 1%, and the beverages segment decreased 4%.
PepsiCo CEO Ramon Laguarta said on a conference call held right after the earnings release that this was "because affordability among low- and middle-income consumers has fallen." Global food conglomerates in the years after the pandemic protected profits by raising prices sharply in step with rising costs. But as consumers no longer accept this, switching to cheaper private-label (PB) goods from retailers or cutting snack consumption altogether, the strategy of holding out with price hikes has hit its limit.
PepsiCo has set the Super Bowl, the biggest U.S. sports event on the 7th, as the turning point to change strategy. The move is seen as an attempt to maximize the effect of price cuts during the period when families and friends gather and consume the most snacks like potato chips. The price reduction will proceed by lowering the suggested retail price itself. The company chose a frontal approach of keeping product size and ingredients the same while lowering only the price.
It is also read as a resolve not to repeat the humiliation suffered in Europe. Earlier, French retailer Carrefour took the drastic step of delisting Pepsi products from shelves, saying PepsiCo had excessively carried out "shrinkflation," reducing product size while raising prices. Experts said, "The fear that losing consumer trust could collapse market dominance itself pushed PepsiCo's management to act."
Of course, the price cuts did not come purely from "love for consumers." Wall Street sees the influence of activist fund Elliott Management at work. After securing a $4 billion equity stake in PepsiCo last September, Elliott strongly demanded expense reductions and revisions to pricing policy to improve the underperforming North America foods institutional sector.
Layered on top is a structural fear over the spread of "GLP-1 (obesity treatments)." As appetite suppressants like Wegovy and Ozempic become mainstream, there is growing concern in the U.S. that overall snack intake could decline. In fact, PepsiCo is responding to the change in consumption patterns by strengthening its lineup of small-pack products. At the same time, the sense of urgency has grown that it must also remove the fundamental factor of "it's expensive, so I won't eat it." In exchange for lowering snack prices, PepsiCo will carry out sweeping restructuring, including closing three plants and cutting staff.
Some experts said PepsiCo, by cutting prices ahead of rivals, will enjoy a first mover effect in seizing market leadership. Citing experts, Bloomberg said, "The food market is led by volume," and forecast that "PepsiCo, by moving ahead of competitors, will set the tone for the industry as it wants and use this approach to regain retail share."
On the other hand, there was a pessimistic view that changing pricing policy alone would fall short of reversing already-shifted consumer sentiment and trends. TD Cowen analyst Rob Moskow told The Wall Street Journal (WSJ), "Consumers are worn out by the punishing inflation accumulated over the past four years," adding, "This cut will help somewhat, but for consumers who still feel prices are expensive, it will be nothing more than cold comfort." In fact, General Mills made slight price adjustments for some products last year, but it failed to fully stop the decline in volume.
The likelihood that the U.S.-led wave of price cuts will reach the Korean market is slim. Doritos and Cheetos distributed in the United States have distribution structures entirely different from Korean products. The move is limited to lowering suggested retail prices within the North American market overseen by PepsiCo's U.S. headquarters. In Korea, Doritos and Cheetos are produced and sold directly at domestic plants by Lotte Wellfood under a licensing agreement with PepsiCo. From materials and supplies sourcing to production expense and margin structure, they move separately from the U.S. Without head office measures such as lowering licensing fees, there is no incentive for domestic prices to fall.
However, Lay's potato chips are sold as finished goods imported as-is. If the importers' supply price falls, large retailers or convenience stores in Korea may have room to adjust retail prices. Still, with the U.S. dollar exchange rate higher than last year and given logistics costs and domestic retailers' margin policies, the dominant view is that an immediate cut consumers can feel will be difficult. Some also say the PepsiCo–Lotte Wellfood license renewal, which expired late last year, could in some form affect pricing policy depending on the new negotiation process.