PepsiCo Faces Weak Snack Demand as Consumer Habits Shift

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Snacking Slowdown Pressures PepsiCo’s Recovery

Americans helped create one of the most robust snacking markets globally, but PepsiCo is now seeing how quickly those consumption patterns can change. A combination of higher living costs, rising adoption of GLP-1 weight-loss medications, and growing interest in healthier eating is weighing on the company’s efforts to revive momentum, a trend reflected in its most recent quarterly performance.

In the second quarter ended June 13, PepsiCo’s North America food business – which includes the Frito-Lay portfolio – reported a 2% drop in sales. Volumes were unchanged for the period, even after the company implemented price reductions of up to 15% on prominent brands such as Lay’s, Doritos, Cheetos and Tostitos.

This represented a setback from the early-year improvement that had encouraged investors. In the first quarter, volumes had increased about 2%, and the North America food segment had returned to growth, signaling a tentative recovery. Overall, volumes in the company’s food business have now declined in four of the last six quarters.

Contrast With Coca-Cola Highlights Market Challenges

The shift in consumer behavior is casting a sharper light on PepsiCo’s performance relative to its closest beverage rival. PepsiCo’s North America beverage volume fell 4% in the latest quarter. By comparison, Coca-Cola reported 4% volume growth in the region three months earlier, underscoring the headwinds facing PepsiCo as consumers become more discerning about both snacks and drinks.

The divergence is also visible in equity market performance. Coca-Cola’s share price has climbed more than 20% so far this year, while PepsiCo’s stock is lower by around 4% over the same period.

These dynamics are likely to intensify focus from activist investor Elliott Investment Management, which took an approximately $4 billion stake in PepsiCo nearly 10 months ago. Elliott has been pressing the company to reinvigorate its soda operations, strengthen its share performance, and consider divesting non-core food businesses.

Investors “certainly want better volumes in the face of them lowering price,” said Stephanie Link, chief investment officer at Hightower Advisors, which holds PepsiCo stock.

Consumer Preferences Move Toward Functional and Health-Focused Foods

American consumers are increasingly seeking foods that they perceive as healthier, favoring attributes such as higher protein content, reduced sugar, and added fiber. This transition is occurring alongside rapidly rising use of GLP-1 medications.

According to a PwC analysis of Numerator data, GLP-1 adoption expanded to 21% of U.S. households in May 2026, compared with 9% in January 2025. Households using these medications are purchasing fewer sweet snacks and cutting down on salty items.

“Consumers have moved from snacking on autopilot to making much more deliberate decisions about what they eat and how often,” said Suzy Davidkhanian, vice president and principal analyst at eMarketer.

For PepsiCo, the shift is particularly consequential. The company’s food portfolio – which includes brands such as Ruffles and PopCorners – contributes about 58% of its annual revenue, making snacking a central driver of its long-term growth story.

Strategic Imperatives and Calls for Faster Innovation

Analysts note that restoring momentum will depend not only on pricing and affordability, but also on how effectively and how quickly PepsiCo can respond to rising demand for functional and health-oriented products.

Company executives indicated last week that a rebound in its North America operations is likely to unfold more slowly than previously anticipated.

“PepsiCo now finds itself competing harder for every dollar, and increasingly that competition is about relevance as much as price,” said Katherine Machado O’Hara, founder of marketing consultancy The Oxigeno Project.

The company “must rethink its ‘giant in the room’ mentality and support their innovation teams to allow products to market much faster … A year late isn’t just a delay, it can mean missing the trend entirely.”

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