PepsiCo Inc. is preparing to raise prices on some of its smaller bags of chips, according to people familiar with the matter, even after reining in the cost of its larger packages in response to consumer pushback.

In the coming weeks, the soda and snacks maker plans to hike prices by 10 to 20 cents on certain single-serve bags that are now retailing for $2.69, said the people, who asked to not be identified because they were not authorized to speak publicly. A spokesman for the company said the increase would apply to a limited number of single-serve products beginning in late June.

Smaller bags often sold as two for $1 are also expected to be repriced higher, the people said.

PepsiCo’s move illustrates how companies are contending with a fresh wave of rising costs after years of inflation stoked higher prices that have pressured consumers.

PepsiCo said the planned increases were prompted by higher production, distribution and retail expenses in the US, and are not a direct response to the war in Iran, which has caused energy prices to surge. The company’s US food business had held the price of some of its single-serve bags steady for nearly 15 years, the spokesman said.

Some of PepsiCo’s smaller chip bags have already seen the suggested retail price that’s usually stamped on the packaging removed, a sign that a price change is coming.

The change comes amid PepsiCo’s highly publicized effort to slash prices on its larger, family-sized chip bags by as much as 15%, a move to win back consumers who balked at prices that topped $7 on some bags. Those reductions will remain in place, the spokesman said.

PepsiCo executives this year have emphasized that they understand consumers are feeling strained as the cost of food continues to climb. Grocery prices rose 0.7% in April, the most in almost four years, and are expected to climb higher later this year.

Lowering prices on its family-size chip bags helped boost sales and bring back consumers who had stopped buying Frito-Lay snacks, PepsiCo Chief Executive Officer Ramon Laguarta said in April. Retailers are also reconfiguring their shelves to give the snack maker more space, part of agreements reached with those customers in conjunction with the larger bags’ price cuts, he said at the time.

Retailers including Walmart Inc. had pressed PepsiCo to lower prices and had reduced its shelf space as sales had declined.

Written by: Kristina Peterson @Bloomberg

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