PepsiCo Beats Estimates – and Is Cutting Chip Prices to Win Shoppers Back

CNBC, CNN, Reuters, and NPR contributed to this report.

PepsiCo surprised Wall Street with a stronger-than-expected quarter and a clear plan to grab back price-sensitive shoppers: it’s trimming prices on some chips, including Tostitos and Doritos, while promising productivity gains will make up the difference.

Quick numbers: adjusted EPS was $2.26 (vs. $2.24 expected) and revenue came in at $29.34 billion (vs. $28.97 billion expected). Net income rose to $2.54 billion, or $1.85 a share, up from $1.52 billion a year earlier. Organic revenue climbed 2.1% in the quarter and net sales were up 5.6%. Shares popped more than 3% in early trading.

The upbeat headline masks a familiar problem: volumes are weak in Pepsi’s home market. Global food volumes fell 2% and North American food volume slipped 1%; NA beverage volumes dropped about 4% (though drink sales ticked up 1% globally). CEO Ramon Laguarta said the quarter showed “sequential acceleration” but admitted affordability is the main hurdle for low- and middle-income shoppers.

So what’s Pepsi doing? Starting this week – and ahead of the Super Bowl snack sprint – the company will cut suggested retail prices on select snack SKUs (think Lay’s, Tostitos, Doritos and Cheetos) by up to about 15%. Retailers set shelf prices, so what you actually pay may vary, but Pepsi expects the move to boost purchase frequency and win back customers. Executives say productivity savings will offset the lower price points.

Pepsi’s retail relationships look encouraged: the company expects double-digit increases in shelf space at top customers on average, and it’s rolling out other nudges to lure buyers – simpler ingredient lists, new packaging, and product innovations like protein Doritos, low-sugar Gatorade, and chips made with avocado or olive oil. Portion-control packs are also a big focus.

The price cuts are part of a broader turnaround package hammered out with activist investor Elliott Management, which pushed Pepsi to cut about 20% of its U.S. product lineup and chase cost savings. Pepsi reiterated the 2026 outlook it gave in December: organic revenue growth of 2–4% and core, constant-currency EPS growth of 4–6%.

PepsiCo is trying to thread a needle – protect margins while making snacks feel affordable again. The Q4 beat gives it breathing room, but the real test will be whether the price cuts and new product pushes actually move the needle on volumes in North America.