Pepsi makes big money from smaller portions

PepsiCo sees ‘tremendous growth’ [in] snacks, as well as mini-cans of its full-sugar products, CEO Ramon Laguarta said Tuesday during an earnings call.

Cause? “Portion control,” Laguarta said.

PepsiCo (PKP) reduces the amount of sugar and trans fats in its portfolio to appeal to health-conscious consumers. He sees the demand for small packages as part of the healthy eating trend.
Snacks and drinks that are low in fat and calories are certainly popular as well — sales of zero-sugar drinks are growing three times faster than full sugary drinks, and baked or “whipped” snacks are also growing faster than fried snacks, Laguarta said.

But sometimes you really want something sweet, salty or fatty, albeit in moderation. This is where smaller sizes come in handy.

In addition to portion control, offering different package sizes is also a strategic way for companies like PepsiCo to capture the attention of large numbers of customers through their many snack and beverage brands. With a wide variety of sizes, there’s something for just about everyone, from heads of large households to impulsive shoppers at gas stations to parents packing their kids’ school lunches every morning.

“It’s becoming more and more clear that smaller packages really matter,” Duane Stanford, editor of Beverage Digest, told companies trying to reach more customers. “If you do it right, it’s definitely a win.”

Inexpensive snacks on the go

There’s another bonus for the company: When customers buy in smaller volumes, they typically spend more per ounce compared to a larger version of the snack or drink—sometimes significantly more. And as people return to their normal pre-pandemic daily routine, some are opting for snacks and sodas that can be eaten on the go, regardless of the relatively high cost.

“Since the pandemic, people have returned to busy schedules and are increasingly opting for convenient options that fit their lifestyle, including takeaways that can be easily transported,” said Claire Lancaster, Head of Food and Beverage at WGSN, a food service company. trend forecasting.

She noted that the demand for smaller foods could also be due to more snacking in general, adding that people are moving “to snacking throughout the day rather than three meals a day.”

And while consumers are making more profit per ounce with larger item sizes, they still spend more dollars. This may not be possible for every buyer, especially in the face of skyrocketing inflation.
This way, people on a budget can splurge on a small snack even if they can’t afford to buy a large package. And how are the prices growth, “consumers are trading in favor of options that are in the budget,” Lancaster said.

Laguarta pointed to a variety of package sizes and prices as a way to keep consumers informed and drive sales.

Shoppers who can only afford small snacks today could become repeat customers tomorrow, Stanford agreed, as companies hope they will “stick to habits.” [their] product or even upgrade to more expensive versions.”

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