(Bloomberg) – According to people familiar with the matter, PepsiCo Inc. is preparing to raise prices on some of its smaller bags of potato chips, even as it slashed the cost of larger bags in response to consumer backlash.
In the coming weeks, the soda and snack maker plans to raise prices by 10 to 20 cents on some individual packages that currently sell for $2.69, said the sources, who asked not to be identified because they were not authorized to speak publicly. A company spokesperson said the increase will apply to a limited number of individual products from the end of June.
According to sources, it is expected that smaller packages, generally sold in packs of two for US$1, will also have their prices readjusted to higher values.
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PepsiCo’s decision illustrates how companies are dealing with a new wave of rising costs after years of inflation that have driven higher prices and pressured consumers.
PepsiCo said the planned increases were driven by rising production, distribution and retail expenses in the U.S., and are not a direct response to the war in Iran, which has caused energy prices to soar. The spokesperson said the company’s U.S. food division has kept the price of some of its individual packages unchanged for nearly 15 years.
Some smaller packages of PepsiCo potato chips have already had the suggested retail price, typically printed on the packaging, removed, a sign that a price change is coming.
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The move comes amid PepsiCo’s widely publicized effort to reduce prices on its family-size snack packs by up to 15%, a move to win back consumers who have complained about prices exceeding $7 on some packs. These reductions will remain in effect, the spokesperson said.
PepsiCo executives have emphasized this year that they understand the pressure consumers are feeling due to the continually rising cost of food. Supermarket prices rose 0.7% in April, the biggest increase in almost four years, and are expected to continue rising further throughout the year.
Lowering prices on family-size bags of chips helped boost sales and win back consumers who had stopped buying Frito-Lay snacks, PepsiCo CEO Ramon Laguarta said in April. Retailers are also reconfiguring their shelves to give the snack maker more space, as part of agreements reached with those customers in conjunction with price reductions on larger packages, he said at the time.
Retailers, including Walmart Inc., pressured PepsiCo to lower prices and reduced shelf space due to falling sales.
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