Pepsi Pivots to Healthier Snacks as North American Sales Slow: Will It Work?

Following the release of PepsiCo's earnings early on Feb. 4 — earnings which showed a distinct slowing of sales around its snacks and drinks in North America, per AP News — the company has shown interest in a pivot toward healthier offerings beneath its broad banner.

The news wasn't entirely bad for the snack and beverage company, however. According to The New York Times, while quarterly revenue slipped ever so slightly to $27.8 billion from $27.9 billion, net income ticked upward to $1.5 billion from $1.3 billion. As PYMNTS indicated, global interest in PepsiCo products made up for a notable lagging demand in North American markets.

Still, PepsiCo has seen North American volumes for its salty snacks, largely held under the Frito-Lay business, fall for five consecutive quarters. Now, according to company leadership, PepsiCo is poised to pivot toward a healthier product lineup — and keeping a strained U.S. consumer budget firmly in mind.

Pepsi To Offer More Price-Conscious Serving Sizes, Healthier Products

During the company's Q4 2024 earnings call, PepsiCo CEO Ramon Laguarta spoke of the company's intentions to diversify its product size array in order to better mesh with the discretionary spending habits of its target audience.

“We'll be offering the consumer multiple choices,” Laguarta said. “At the beginning of the month, the consumer may go for an 18 count, but maybe by the end of the month they want a six or eight count of chips, depending on their budget availability."

But portion or package sizing isn't the only area where the company sees room for improvement. Given the increased focus on fitness, wellness, and healthy eating that has entered the American cultural imaginary, PepsiCo sees economic rewards at the end of the day should it pivot to address this fact sooner rather than later.

“This has been a multiyear evolution of the consumer,” Laguarta said. “We think there has been more conversation on social media about health and wellness, and we’re seeing some behaviors that have changed and an acceleration of that in the U.S."

While PepsiCo isn't actually seeing any huge impact on its business surrounding the entry of GLP-1 weight-loss drugs like Wegovy on the scene, there is a broader consumer consensus forming around low sodium, low fat, high protein, and whole grain packaged goods.

As AP News underscored, PepsiCo is ready to meet this demand with existing products such as Pepsi Zero Sugar, the popular SunChips lineup, and its Simply chips, the latter of which contain no artificial colorings or flavor. And, according to Laguarta, this particular division of the company's offerings is set to expand in the years to come.

“There’s a higher level of awareness in general of American consumers toward health and wellness," he said.

"We’re very confident that our North American business will accelerate this year,” Laguarta added.

PepsiCo had previously gestured toward a commitment to improving its healthier snack portfolio via its purchase of Siete Foods in the fall of 2024 — a Mexican-American brand honed in on salsa, tortillas, and snacks. In addition, brands like Smartfood Popcorn and PopCorners appeal to a younger, more health-minded demographic.

Weight-Loss Drugs and Their Impact on Pepsi's Future

As mentioned earlier, PepsiCo's CEO downplayed the effect of weight-loss drugs on the company's bottom line during the earnings call.

"We continue to study GLP,” Laguarta said. “Because of the lower levels of adoption and people coming in and out of the treatment, we see very little impact on the business.”

However, as a Dec. 2024 research report from the Cornell SC Johnson College of Business indicated, there may be some cause for concern for PepsiCo if drugs belonging to these categories gain significant traction.

"Households with at least one GLP-1 user reduce grocery spending by approximately 6% within six months of adoption, with higher-income households reducing spending by nearly 9%. These reductions are driven by significantly larger decreases in purchases of calorie-dense, processed items, including an 11% decline in savory snacks. In contrast, we observe directional increases in nutrient-dense purchases, such as yogurt and fresh produce," the abstract read.

Pepsi's Away-From-Home Partnerships Could Also Be Key to Success

Finally, the company's CEO spoke to another avenue of potential growth for PepsiCo — its partnerships with restaurant and food vendors.

“Moreover, for our own business, the big opportunity we’re also addressing is the away-from-home opportunity, which is a blue space, a blue ocean of opportunities for us,” Laguarta suggested during the earnings call. “And as consumers are being less at home and more away from home, that’s another area of opportunity.”

In particular, as AP News reported, PepsiCo is looking to enhance its current partnerships with existing properties such as its Doritos Locos Tacos (in conjunction with Taco Bell) and Tostitos Cantina food trucks.