PepsiCo is adapting to declining snack sales by altering packaging sizes and boosting advertising for brands like Tostitos and Doritos. The company recently lowered its annual sales growth forecast and is increasingly utilizing retailer data to enhance demand forecasting and supply chain efficiency. PepsiCo’s global strategy head emphasized the importance of collaboration and data sharing with retailers, including insights into past purchasing behaviors, to optimize inventory and sales, amid ongoing challenges in price negotiations and inflation pressures.
PepsiCo is adapting to declining snack volumes by revamping its product offerings. The producer of well-known brands like Lay’s and Pepsi has experienced sluggish sales growth recently, prompting changes in packaging sizes and a boost in advertising for its Tostitos and Doritos lines.
In early October, the company updated its forecast for annual sales growth, signaling a need for increased efficiency. A high-ranking strategy executive at PepsiCo revealed that the firm is now leveraging more data from retailers regarding their sales of PepsiCo products. This initiative aims to enhance demand forecasting and streamline the supply chain.
‘We are collaborating more extensively with retailers,’ stated Angelika Kipor, PepsiCo’s global head of strategy and transformation. She noted varying levels of collaboration, but emphasized that many retailers seek a deeper understanding of their entire supply chains. PepsiCo is sharing its forecasting data with major retail partners.
For instance, when Carrefour placed a recent order with PepsiCo, the company provided valuable historical data on products that had previously sold well but were currently missing from the order. This foresight encouraged Carrefour to restock those items, ultimately boosting PepsiCo’s sales.
VALUABLE INSIGHTS
One of the most coveted types of insight among retailers is checkout purchase data, which can be challenging to obtain. Retail giants like Walmart capitalize on this by offering subscriptions to suppliers for first-party data related to shopping behaviors and inventory levels.
Kipor explained that the depth of these partnerships relies on mutual trust and the digital capabilities of the retailers involved. She emphasized the role of artificial intelligence in processing vast amounts of data, allowing PepsiCo to respond swiftly to market demands.
Other packaged goods companies, such as Unilever and Danone, are also exploring AI applications to enhance their supply chains, determine brand portfolios, reduce costs, and optimize production and shipping processes.
While Kipor refrained from naming specific retailers engaged in data-sharing agreements, she clarified that these collaborations differ from the often contentious pricing negotiations between retailers and consumer goods manufacturers.
Last year, PepsiCo announced it would halt further price increases on its beverages and snacks after several hikes in response to rising inflation post-pandemic. However, prices for popular items like Lay’s chips, Tostitos, and Diet Pepsi continued to climb in the following quarters, albeit more gradually, according to recent filings with U.S. stock exchange regulators.
‘I’m not involved in pricing discussions with PepsiCo’s clients,’ noted Kipor. ‘Both retailers and we prefer to avoid stock shortages; our goals align.’