PepsiCo (PEP) is doubling its snacks business after years of declining volume growth.
On Thursday, before the market opened, the company beat Wall Street’s low profit estimates in its third-quarter report. But the slowdown in snacking continued in the United States: food revenues in North America fell by 3% and units sold by 4%.
PepsiCo CEO Ramon Laguarta told Yahoo Finance that a major overhaul is underway.
“The situation in the United States is accelerating,” Laguarta said in a telephone interview. “We’re cutting costs across the system very aggressively, particularly at Frito-Lay. … This has been a very significant restructuring.”
This year, the company laid off 7,000 people from the Frito-Lay network, calling it “difficult” but “something we had to do.” Laguarta said that starting in May and continuing through the fourth quarter, investors can expect “some additional planned shutdowns and warehouse closures.”
In September, activist investor Elliott Management disclosed a $4 billion stake in the company, calling for a turnaround, particularly in its snacks business.
The company also faces pressure from RFK Jr.’s Make America Healthy Again (MAHA) initiatives.
In the company’s prepared remarks, it noted plans to remove artificial flavors from snacks like Cheetos and Doritos. Additionally, it plans to expand the use of avocado oil and olive oil through its Lay’s brand – and look into its healthier snack brands like Simply, Sabra, Sun Chips and Siete Foods, which the company acquired earlier this year.
Additionally, new package formats are in the works, as well as a Doritos protein chip and more offerings containing fiber, whole grains and protein from brands like Quaker, Sun Chips, PopCorners and Smartfood.
Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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