Salty Snack Sales Bolster PepsiCo’s Q2 Earnings

Salty Snack Sales Bolster PepsiCo’s Q2 Earnings

PepsiCo controls about 60% of retail sales in the $24 billion U.S. salty snacks market through its Frito-Lay division, according to Packaged Facts in the report Salty Snacks: U.S. Market Trends and Opportunities. The company competes across all categories and is a leader in most. Other major players each have less than 10% share of the salty snacks market.

Salty Snacks Sales Strengthen PepsiCo Despite Sluggish Beverage Segment

PepsiCo’s dominance in the snack industry has clearly served the company well. On Tuesday, July 10, PepsiCo revealed that its fiscal second-quarter earnings exceeded analysts’ expectations largely because the sales of Cheetos and other salty snacks offset the company’s sluggish sales from its soft drink segment.

The Frito-Lay division—which includes popular brands such as Cheetos, Doritos, Ruffles, Lays and Tostitos—was up 4% in the second quarter, according to PepsiCo’s announcement. The company’s snack division will likely continue to thrive in the wake of PepsiCo’s May 2018 acquisition of baked fruit and vegetable company Bare Foods. The acquisition keeps PepsiCo on pace to meet consumer demand for healthier snack food options and potentially positions PepsiCo to build a base for broader business of plant-based snacks.

The Future of PepsiCo and Salty Snacks in 2022

Looking ahead to 2022, Packaged Facts expects PepsiCo will continue to lead the salty snacks market by a large margin. Despite challenges and competition to the segment from other snacks—namely chocolate and non-chocolate confections, cookies, and crackers, as well as nuts, seeds, and dried and fresh produce—the salty snacks market is projected to grow over the next several years. Packaged Facts forecasts the salty snacks market will have sales of $29 billion in 2022.

Market growth will come partly from the efforts of PepsiCo and other companies offering products that are as flavorful as possible but also as healthy and nutritious as possible to satisfy the growing demand among consumers who want to indulge without the guilt. This includes a rise in “better for you” snacks will continue to use alternative (non-potato) ingredients and include different proteins, grains, vegetables, and superfoods.