The news: PepsiCo is scrambling to overhaul its portfolio in response to pressure from the “Make America Healthy Again” movement and activist investor Elliott Investment Management.
- The company is redesigning Lay’s packaging to emphasize that the chips are “made with real potatoes” and reformulating products to avoid seed and corn oils as well as artificial coloring.
- Other planned releases include protein-enhanced editions of Doritos and Quaker products, as well as a “Naked” platform featuring classic snacks free of artificial colors or flavors.
Why it matters: Pepsi is leaning on its expanded “permissible” portfolio to help recapture share lost to private labels and upstart brands. The company is confident it can win shoppers back—and persuade them to pay more—by promoting food and beverage options with perceived functional benefits, like gut health or increased protein content. Such claims also resonate strongly in the age of GLP-1s, as weight loss drug users search for ways to offset nutritional deficits.
However, Pepsi’s relatively late entrance to the protein party exposes the consumer packaged goods (CPG) giant’s weaknesses. Like many of its peers, it has mostly relied on brand recognition and loyalty to keep sales growing. But price hikes and a lack of innovation have enabled nimbler and cheaper brands to grab spending from health- and price-conscious shoppers—leaving PepsiCo to play catch-up as it struggles to keep up with consumer behavior and the demands of the MAHA movement.
Our take: CPG giants like PepsiCo are having a difficult time staying current with the rapidly shifting food landscape. Food trends are emerging faster than ever, while few last the test of time—making it challenging for brands to determine where to focus their resources.
As the trend cycle speeds up, CPGs must be nimble to avoid losing share. Selling off non-core assets and splitting up could help reduce organizational bloat, but companies must also prioritize innovation to ensure they can stay relevant as demand shifts.