Even though PepsiCo’s top management acknowledged that 2024 will be a ‘year of normalization’ after ‘double-digit growth’ years, potato chips will continue to be a big driver of the company growth, and a ‘multi-tier opportunity’ according to the latest company’s earnings call.

Ramon Laguarta, Chairman & Chief Executive Officer of PepsiCo, mentioned that the unsalted and flavors segment of the product will generate ‘loyalty and higher value for consumers’.

“After three years of outsized growth for Frito, if you think about the double-digit growth, we knew this year was going to be a year of normalization and that’s what’s happening. The consumer is reassessing patterns and with mobility and some of the financial situation. Now going forward, we think that the category will continue to grow at the pace of the past because of the long-term trends [e.g. previously referred to]. Now, the way we’re thinking about our brands playing in that space, potato chips will continue to be a big driver of the growth. And we’re looking at potato chips […] as a multi-tier opportunity. […] So we have Lays clearly as the main part of the category. And within Lays, we will have unsalted and we’ll have flavors where we know we can create a lot of loyalty and higher value for consumers,” Laguarta declared.

He added, that the company’s shareholders ‘feel good’ about the investments that they put this summer, mostly behind the potato chips category and Lays.

“That drove growth in the potato chips business. Lays gained three points of household penetration, and we feel good about that return. Now we’re going to apply that sequentially to other categories,” Laguarta said.

‘More Permissible Options for Consumer-sustained Potatoes’

PepsiCo’s CEO declared during the October 8th earnings call that Frito-Lay will develop sub-segments like lightly salted or baked that provide even more permissible options for consumer-sustained potatoes

“[…] Then we’ll have, at the upper end of the category brands like Miss Vickie’s that provide a more premium experience. So, we’re thinking about each one of those categories as multi-tier where we offer value to some consumers, more specific choices for other consumers that want to stay within our brands. But the overarching – the way we’re thinking about the category is to continue to create growth, continue to ensure that the long-term, the category creates occasions and brings consumers into the – will bring consumers into the category with our brand programs, our innovation, to keep the category growing very healthy in the future for us and for our customers. And that’s how you should think about the long-term value that we can create with the Frito-Lay business,” PepsiCo’s CEO mentioned.

Pricing Topic Goes Hot: ‘Investing in Affordability’

According to Jamie Caulfield, Executive VP & Chief Financial Officer, on the revision from 4% to low single digits, the combination of recovery of the consumer in the U.S. has been slower than the company’s shareholders had anticipated.

Then, to a lesser degree, the geopolitics have impacted the international segment.

“That’s probably a half-point drag on total PepsiCo revenue growth in the quarter,” Caulfield declared.

He was cautious though when speaking about pricing.

“As far as pricing goes, it’s a bit complex. We’re investing in affordability where it makes sense, but we’re investing in several levers to stimulate demand, and I think too soon to call on what the pricing outlook is going forward. With Frito, our focus right now is on stimulating consumer demand, doing it in a responsible, disciplined way. And — but overall, we’re focused on the total PepsiCo margin. Over time, I think when the consumer gets a little more healthy and the business accelerates, we can put a little more emphasis on managing the margin. But for right now, we’re focused on the consumer and stimulating demand,” Jamie Caulfield concluded.