How $7 Doritos Helped Cost Pepsi Over $1 Billion

PepsiCo spent years convincing shoppers to pay more for Doritos, Cheetos, and Lays. It worked — until a bag of chips crossed the $7 mark.

Now, according to The New York Post, the company is scrambling to undo the damage.

After hiking prices across its Frito-Lay division for several years, PepsiCo missed its internal revenue targets by more than $1 billion in two straight years. The company finally announced in February that it would cut prices by as much as 15 percent on some of its biggest snack brands, a sharp reversal for a business that had treated higher prices as its easiest path to growth.

The problem was not that shoppers suddenly stopped eating chips. The problem was that they stopped buying PepsiCo’s chips.

At Walmart, the price of Doritos climbed nearly 50 percent between 2021 and 2025. In some stores, large bags topped $7. As prices rose, shoppers began reaching for cheaper alternatives, including Walmart’s store brand and rivals like Takis.

Walmart noticed. The retail giant began cutting shelf space for Frito-Lay products and handing more room to lower-cost competitors. That move hit PepsiCo where it hurts most: visibility. Frito-Lay had spent more than a decade as PepsiCo’s most dependable business, controlling a huge share of the U.S. salty snack market and posting growth for 53 consecutive quarters.

But even a powerhouse can overplay its hand.

From 2021 through 2023, PepsiCo relied on price hikes to offset rising costs for ingredients, shipping, and packaging. Company filings show Frito-Lay’s “effective net pricing” jumped as much as 17 percent in 2022 alone, even as the number of bags sold barely moved.

By 2023, sales volumes had started to slide. By 2024, Frito-Lay revenue had turned negative for the first time in more than a decade.

Inside PepsiCo, executives had reportedly been debating price cuts since at least 2024. They hesitated, worried about taking a short-term hit to revenue. Instead, the company leaned on promotions, smaller package sizes, and marketing. None of it worked.

By the time PepsiCo finally blinked, retailers had already pushed back, and shoppers had already changed their habits.

The company is now trying to win them back with lower prices, bigger bags, and a simpler lineup. PepsiCo said it will shrink its snack portfolio by roughly 20 percent and focus more heavily on its biggest brands, including Doritos and Cheetos.