The pricing environment for consumer packaged goods (CPG) is shifting fast. Recently, PepsiCo announced cuts of up to 15% on core snack brands like Lay’s and Doritos after shoppers pushed back against repeated price increases. At the same time, other major players such as Procter & Gamble and Coca-Cola are rebalancing pricing and entry points to protect market share. This is more than a one-off tactical move. It signals a broader reset in consumer goods prices and shows that traditional pricing power is weakening under current consumer pressure.
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The Consumer Goods Prices Reset
Major brands have long leaned on price increases to protect margins in inflationary environments. For years, rising input costs and supply chain disruptions encouraged regular hikes in consumer goods prices. However, that strategy is now testing the limits of what consumers will tolerate, especially as the link between price and demand becomes more visible.
In PepsiCo’s case, the reset in PepsiCo prices responds directly to softness in demand after several rounds of higher prices. Consumers show resistance in real purchasing behaviour, not just in sentiment surveys. As a result, companies are now taking visible steps to reinstate affordability.
This development matters for any business watching price sensitivity in its customer base. It tells us something fundamental: there are practical limits to how much and how fast prices can rise before demand erodes. Even strong products brand power is not immunity.
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Consumer Goods Prices and Demand Disconnect
There are three key execution issues that many brands share as consumer goods prices rise.
Stacked Price Increases Without Clear Value Rationale
Many companies raise prices several times within a short period. The increases often outpace expectations for improvements or innovation. This weakens perceived value and disrupts the balance between price and demand.
Shrinkflation Without Communication
In some cases, brands reduce pack sizes or change formats instead of adjusting shelf prices. Though common, consumers see this as paying more for less. When shoppers feel misled, trust erodes quickly, and even strong products brand power starts to weaken.
Reliance on Brand Strength Alone
Some brands assumed that customer loyalty would absorb repeated price rises. That worked for a while, but loyalty alone does not insulate products from real household budget constraints. Especially when lower-income or budget-driven consumers make up a significant share of category demand, value perception becomes the dominant decision driver. Recent data from the US shows a widening gulf in spending where premium categories attract affluent shoppers while value-focused products struggle.
These issues are not unique to snacks. They occur whenever pricing decisions disconnect from how consumers actually behave at the shelf and from a disciplined price architecture.
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How Poor Consumer Goods Prices Weaken Products Brand Power
The commercial consequences can be swift and lasting. First, volumes drop as shoppers trade down to cheaper alternatives or private labels when consumer goods prices stretch too far. Second, increases that fail to land erode reference prices, the baseline consumers use to judge fairness. Once that benchmark shifts, the link between price and demand weakens, and it becomes much harder to lift prices again without resistance.
Third, brands can fall into structural pricing pressure. When enough competitors reset expectations, categories reset collectively. What feels tactical quickly becomes an industry-wide correction in consumer goods prices.
This effect is not theoretical. Even strong players must balance affordability with perceived value, or risk long-term erosion of products brand power and competitive position.
Consumer Goods Prices and Structured Price Architecture
In response, companies are adjusting their pricing strategies rather than just price points. We are seeing moves toward:
- Portion control and format variation to better match different customer budgets
- Multipack and value bundle options to widen appeal without cutting too deeply into margins
- Clearer, tiered pricing structures that help shoppers see the value gap between options
This shift reflects more than tactical discounting. It signals a broader philosophical change. Pricing is now about scaffolding value rather than extracting margin. Importantly, this must be done with precision. Poorly managed price resets can destroy value as quickly as poorly executed increases.
What This Means for Pricing Teams
The first priority is to stop defaulting to blanket increases. Instead:
- Rebuild your price architecture so your range has logical and visible price tiers
- Protect entry points to ensure affordability anchors the category before moving up
- Link every change to a visible value signal that customers can understand, not just cost changes
Price should be seen as a strategic lever, not an afterthought to cost pressures. Great pricing teams frame changes around consumer behaviour and elasticity, not just finance targets.
Tools like value maps, elasticity testing, and tier gap analysis are essential here. When pricing changes are grounded in data rather than intuition, they land more effectively and minimise negative demand response.
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What This Means for Business Leaders
For executives, the broader takeaway is more strategic. Pricing must be treated as an integral commercial strategy, not a short-term fix when costs rise. Leaders must:
- Ensure pricing decisions are informed by consumer behaviour insights
- Balance margin goals with long-term demand sustainability
- Build cross-functional governance so pricing and marketing speak the same language
Too often, pricing sits in isolation from commercial strategy or demand forecasting. What we see now is a painful reminder that pricing has to be holistic, not siloed.
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A Final Insight on Consumer Goods Prices and Sustainable Pricing Power
The recent moves by PepsiCo and others signal a shift in consumer goods prices. Pricing power has limits, and consumer behaviour shapes outcomes as much as cost pressure.
Pricing is not operational detail. It is commercial strategy. It drives brand health, volume, and long-term profitability.
If your business is reviewing pricing, approach it with discipline and evidence. Strengthen your price architecture. Ground decisions in real price and demand data. Make value signals clear. Focus on capability, not short-term fixes.
Many businesses face this same tension. However, reacting fast is not the same as responding well. If you want clarity and confidence in your pricing decisions, let’s talk. We work with leadership teams and pricing functions to design structured, evidence-based pricing and stronger organisational alignment. Reach out and make sure your pricing works for you, not against you.
For a comprehensive view of maximising growth in your company, download a complimentary whitepaper on How FMCG Can Generate Profitable Growth Faster.
Are you a business in need of help aligning your pricing strategy, people and operations to deliver an immediate impact on profit?
If so, please call (+61) 2 9000 1115.
You can also email us at team@taylorwells.com.au if you have any further questions.
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