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PORTSIDE CULTURE

A SIGN THAT CONSUMERS ARE ANXIOUS: THEY’RE CUTTING BACK ON SNACKS
 
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Julie Creswell and Danielle Kaye
April 24, 2025
The New York Times
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_ Economic concerns are starting to affect consumer spending, from
snack consumption to travel plans. _

PepsiCo cut its growth forecast, pointing to tariff volatility and a
pullback in consumer spending., Mario Tama/Getty Images

 

Consumers, worried about the economy, are pulling back on their
spending, and that anxiety is translating into lower sales and profits
for some of the country’s largest consumer-oriented companies.

On Thursday, PepsiCo cut its full-year guidance outlook, citing a
reduction in consumer spending as well as the impact the company is
feeling from increased global tariffs.

“Relative to where we were three months ago, we probably aren’t
feeling as good about the consumer now,” Jamie Caulfield, the chief
financial officer of PepsiCo, told Wall Street analysts and investors
on an earnings call Thursday morning.

The company, which manufactures Pepsi and Gatorade drinks as well as
popular snacks like Doritos and Cheetos, cut its profit forecast for
the full year to flat from its earlier guidance that expected earnings
growth to be in the mid-single digits. It reported a decline of 1.8
percent in revenue, to $17.9 billion, for the quarter that ended March
22, and a drop of 10 percent in net income, to $1.8 billion, from a
year earlier.

PepsiCo’s stock fell more than 4 percent, to $136, by early
afternoon.

Comments made on PepsiCo’s earnings call echoed what executives at
other consumer companies have said in recent days about how
apprehension in the global economy is key to less consumer spending.
The pullback has started to weigh on some companies’ revenues and
dampen their outlook for the coming months, especially as they try to
calculate the costs they’ll incur from the Trump administration’s
new or increased tariffs on imported goods.

At Chipotle, same-store sales fell for the first time since 2020 in
the most recent quarter, the chain reported this week. Uncertainty
about the path forward for the U.S. economy started to affect spending
in February, the company said, shortly after President Trump’s
inauguration — a trend that continued into April.

“It was all around this idea of saving money, economic uncertainty
— they’re eating at home more frequently than they’re eating
out,” Scott Boatwright, the burrito chain’s chief executive, said
when asked about consumer behavior. The underlying trend, he added, is
“really tied to the consumer sitting on the sideline.”

Chipotle also lowered its full-year guidance. Beyond sluggish consumer
spending, the chain said it expected Mr. Trump’s tariffs imposed in
April — a broad 10 percent duty on many imports and tariffs on
aluminum — to raise the company’s food, beverage and packaging
costs this year.

Another signal of distress among shoppers: Consumers are doing less
laundry to scale back on detergent purchases, an executive from
Procter & Gamble, which makes household staples like Tide detergent,
told Yahoo Finance.

On Thursday, P.&G. cut its full-year outlook and said whiplash on
tariff policy had factored into a “pause” in consumption as
consumers also tried to make sense of stock market volatility and job
market uncertainty, said Andre Schulten, the company’s chief
financial officer.

Signs that economic concerns are starting to affect consumer spending
are appearing in the airline industry, too. American Airlines pulled
its full-year guidance on Thursday, mirroring a move last month from
Delta Air Lines. Robert Isom, the chief executive of American
Airlines, told CNBC on Thursday that domestic leisure travel “fell
off considerably” starting in February.

The most recent survey from the Conference Board showed consumer
confidence tumbling in March to its lowest level since January 2021.
Americans are increasingly anxious about their jobs and finances, the
business group reported.

Hoping to entice consumers who are tightening wallets, executives at
PepsiCo said it was offering less expensive, under $2, individual bags
of snacks along with smaller snack packs in stores.

PepsiCo said it had calculated into its lower profit estimates the
higher costs associated with the tariffs. “We also factored in some
of our mitigation plans, some we will be able to execute more quickly
than others,” Mr. Caulfield said on the call on Thursday.

Analysts had been keeping a close eye on the impact that tariffs would
have on the food and beverage industry, specifically a 25 percent
tariff on imported aluminum.

And while Wall Street analysts have been watching for potential
fallout of the Trump administration’s trade wars on sales of
American brands in key international markets, specifically Europe and
China, PepsiCo said its global markets performed well in the first
quarter.

In the United States, the popularity of using Ozempic and other
weight-loss drugs has curbed sales for snacks and shifted purchases to
smaller portions, Ramon Laguarta, the chief executive of PepsiCo, told
analysts.

PepsiCo is also navigating demands by Health Secretary Robert F.
Kennedy Jr. This week, Mr. Kennedy declared that “sugar is poison”
during a news conference and said he had “an understanding” with
major food manufacturers to remove petroleum-based food colorings from
their products by the end of 2026.

Mr. Laguarta said that PepsiCo had been an industry leader in reducing
sodium and sugar in products and that more than 60 percent of its
business was from products with no artificial colors. In the next few
years, he added, the company will have “migrated all the portfolio
into natural colors or at least provide the consumer with natural
color options.”

Julie Creswell is a business reporter covering the food industry for
The Times, writing about all aspects of food, including farming, food
inflation, supply-chain disruptions and climate change.

Danielle Kaye is a Times business reporter and a 2024 David Carr
Fellow, a program for journalists early in their careers.

* snack foods
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* consumer spending
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* Economy
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