PepsiCo may be best known for its indulgent products, like its eponymous soda and craveable chips, but as consumer preferences increasingly favor better-for-you options, the CPG giant is “playing offense to transform the company” to better meet growing demand for health, wellness and functionality in food and beverage, according to CEO Ramon Laguarta.
The pivot also caters to an increasingly diverse population, including aging shoppers who want lower sodium, and consumers from different cultural backgrounds who want flavors that reflect their heritage and values, Laguarta explained at the Consumer Analyst Group of New York’s annual meeting Feb. 18.
But he acknowledged, the shift won’t happen overnight and will require PepsiCo to overcome challenges, including reinforcing supply chain resilience in an era of geopolitical uncertainty and adapting to omni-channel shifts to meet consumers where they are.
‘4 big areas for growth and higher value per consumption’
PepsiCo’s portfolio transformation balances on two key pillars, according to Laguarta.
The first is innovating “to make sure that our brands connect with consumers and the new needs of consumers around the world,” he said.
The second is “building new occasions,” including mini-meals and convenient meals – especially away from home, he added.
Across both pillars, the company will strive to “restage” its largest brands, including Lay’s, Tostitos, Gatorade and Quaker, by following a similar playbook used to reposition Pepsi, which included a new look and an “extremely successful” focus on “non-sugar” options, Laguarta said.
Across the brands, the company will focus on emerging consumer preferences for low- and no-sugar and reduced sodium snacks, no artificial colors and flavors, alternative cooking methods and oils, and portion control. It also will expand the selection of products with “functional options,” including fiber, protein, whole grains, hydration and energy.
Some innovations around functional benefits will focus on removing ingredients of concern, while others will offer added benefits.
“We’ve been working on sodium reduction for a long time. As the population ages, we think this will be a great space. We are having not only less sodium in our products, but also specific offerings with reduced sodium,” such as Lay’s lightly salted classic chips, Laguarta said.
In addition, sugar reduction is a “big growth lever, whether it is with soft drinks, whether it is sports drinks or some others. Now, low-sugar is a consumer preference, so we will be participating in low sugar with Poppi,” he added.
Beyond reduction, the company plans to boost nutrients of desire, including protein and fiber, which are “the two trends that we plan to capture at scale,” Laguarta said.
“Fiber is the No. 1 deficiency in our diets. It is not only in the US, but in a majority of countries around the world. We think we have a huge right to succeed with fiber,” he added.
The company is launching fiber-focused SKUs under Sun Chips and Smartfood, including Fiber Pop popcorn with 6 grams of fiber per serving. It also offers high fiber instant oatmeal under Quaker. Laguarta said he sees potential to add fiber and protein to hydration under the Propel brand.
PepsiCo is also boosting protein in unexpected places – including under its Doritos brand with chips that pack 10 grams of protein per serving and under its Starbucks line with a Coffee & Protein Classic Caffe that has 22 grams of protein. It also plans to relaunch Muscle Milk high protein shakes.
PepsiCo’s playbook in action
PepsiCo already is pushing innovation and messaging around these areas as it repositions some of its iconic brands.
Under Lay’s this will play out by focusing on the chips’ “simple ingredients based on nature,” including the “best” and “freshest potatoes” and no artificial ingredients or colors, said Laguarta. For Tostitos, the focus will be on how the company makes and cooks the masa, and for both, the company will highlight the use of olive and avocado oil, which is something many consumers want and will pay more for, he said.
PepsiCo plans to position Gatorade as a hydration solution for “everyday occasions” and “every consumer – no matter whether they do sports or don’t do sports,” Laguarta said.
The company also plans to relaunch its oat brand Quaker in the second half of the year to focus on “benefits around gut health, heart health, energy and weight management in a way that very few other brand can do for on-the-go and in-home consumption,” he said.
Ultimately, Laguarta framed the transformation as essential not just for meeting consumer demand but for driving higher value per consumption and long-term growth. By layering functionality, premium ingredients and portion control into its core brands, PepsiCo aims to expand margins while reinforcing brand loyalty in an increasingly competitive food and beverage landscape.
