From Cheetos to Oreos, consumers are balking at rampant snack-flation
Long before President Trump's on-again off-again tariff policies caused a decline in the stock market and sparked fears of a global recession, a domestic economic pullback in a specific grocery category — snack foods — has been developing momentum.
Industry insiders believe that the rising costs of all snack foods — both salty and sweet — have led consumers to cut back on purchasing these 'non-essential' items.
In a February earnings call, PepsiCo — which owns such snack food brands as Cheetos, Lay's, Doritos, Fritos, Ruffles and Rold Gold, among others — reported below-expected quarterly results as demand for its snacks and drinks fell in North America for the fifth straight quarter.
Last month, NBC's Today show noted that the average cost of a bag of chips is now $6.46 — a 31% increase compared to prices from 2021. And the Bureau of Labor Statistics says that snack food prices have increased more rapidly than any other grocery store category (save for the recent egg shortage, of course). That federal government agency reported that while grocery prices have increased 23% since February 2021, prices for chips and similar snack foods have increased 29%.
The Today show segment underscored how consumers are bypassing impulse purchases of snack foods and candy bars at the checkout line by featuring a TikTok video of a young woman holding a bag of Funyons (another PepsiCo product) and wondering in disbelief "when did this go from costing 99 cents to $2.69?'
The young woman put the bag of Funyons back on the rack.
General Mills, which makes an array of popular cereals (including Cheerios, Cinnamon Toast Crunch and Cocoa Puffs) as well as Nature Valley granola bars and Fruit Roll-Ups, reported that it had seen a 'slowdown' in all of its snacking categories.
During an earnings call, General Mills CEO Jeff Harmening was asked if he thought that more people being on GLP-1 weight-loss medications such as Wegovy and Zepbound could be contributing to the decrease in snack food purchases, but he dismissed that as a major factor.
"Our belief is that consumers have become much more value conscious," he said while also mentioning that many consumers were cutting back on dining out and purchasing other non-essential grocery items.
Last month Money magazine reported that 'J.M. Smucker recently said its Hostess brand was seeing decreased sales, with the company's executive citing general inflation in the economy that is weighing on consumer spending. Campbell's, which owns Goldfish and Kettle Brand chips, reported a 2% drop in organic sales, also blaming [decreased] snack food demand. Oreos maker Mondelez International recently said it expected a drop in profit due to rising cocoa prices, which have prompted price increases.'
And it's not just snack-food manufacturers who are feeling the effect of this consumer behavior.
Retailers ranging from gas station convenience stores to behemoths like Walmart and Dollar General have reported that their snack food sales are down.
Some experts note that sector-wide 'shrinkflation' — which is when companies reduce the size of a product but charge the same amount as for the prior larger portion — has further discouraged consumers from making these kinds of purchases.
Industry watchdog The Future of Commerce noted that 'faced with high prices and economic uncertainty, consumers are foregoing their favorite snack foods' — with 42% of them telling surveyors from the market research firm NIQ that high prices were why they were cutting back or, when possible, switching to cheaper generic store-label brands.
Just as the fast-food industry has found in recent years, the consumer-packaged goods (CPG) industry is now realizing that when consumers with finite resources must make choices based on affordability, their products will be among the first on the chopping block.
And just like fast-food giants like McDonald's and Wendy's have tried to regain customers' loyalty by offering more value-based options, executives at snack food manufacturers plan to do the same thing.
General Mills' Harmening said that 'we're focused on improving our sales growth in fiscal 2026 by stepping up our investment in innovation, brand communication, and value for consumers.'
Among the ways that they — and their competitors — are expected to do this, said The Future of Commerce, include 'releasing new versions of their products as well as brand-new items to appeal to health-minded consumers, including snacks packed with protein and mini sizes.'
Whether the major snack food brands are able to win back customers with new products and repackaging of existing ones, only time will tell.
But if consumers remain steadfast in rejecting ultra-processed overpriced snack food, they'll improve both their health and bottom line.
This article originally appeared on Palm Beach Post: Experts: Cost conscious consumers choosing to cut back on snack foods
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