PepsiCo to rebrand Lay's, Tostitos without artificial dyes, flavors

By Jessica DiNapoli and Juveria Tabassum

(Reuters) -PepsiCo is planning to highlight what will no longer be in its potato or tortilla chips - artificial colors or flavors - when it re-launches its Lay's and Tostitos brands later this year, executives said on Thursday.

The overhaul for the company's top-selling snack brands comes as U.S. Health Secretary Robert F. Kennedy Jr. pushes Americans to eat "whole foods" and pressures manufacturers to ditch dyes.

U.S. food makers have been announcing plans to remove dyes from their products and introduce new ones without the colors under pressure from Kennedy and the Make America Healthy Again (MAHA) social movement backing him.

"We're trying to elevate the real food perception of Lay's. If you think about the simplest and most natural snack, it is a potato chip; it's a potato, it's oil, and it's a little bit of salt—the most simple, no artificial ingredients," said CEO Ramon Laguarta in a call with investors.

The company also said it was expanding use of avocado and olive oil across its brands, rather than the canola or soybean oil it uses. The MAHA movement has questioned the health benefits of certain food oils.

In April, PepsiCo said it planned to migrate its entire portfolio to natural colors, or give consumers the option to have a product without a synthetic dye. Its Cheetos snacks and Gatorade drinks rely on synthetic dyes for their bright hues.

It already offers Lay’s and Doritos without artificial colors or flavors under its Simply segment.

“The Simply line extension for existing chip brands is still in early innings - consumers have not engaged so far, and given that, it will be seen how consumers react to a rebranding of Lay's and Tostitos over the next couple of quarters,” said Christian Greiner, F/m Investments senior portfolio manager.

COSTLY PREMIUM PRODUCTS?

The soda pop maker also said on Thursday it would use sugar in its products like Pepsi beverages if consumers want it.

On Wednesday, President Donald Trump said Coca-Cola will start using cane sugar in its beverages in the U.S., a dietary preference of Kennedy's MAHA movement. Both Pepsi and Coke use high-fructose corn syrup for their sodas, which is generally more cost-effective.

The moves come at a time when packaged food companies like PepsiCo are seeing consumers reel in their spending after the industry raised prices over the years since the COVID-19 pandemic to shield their margins.

PepsiCo has been offering more products at lower price points and smaller pack sizes in its food segment to meet the demand for affordable snacks.

"While there is clearly demand for cleaner ingredients in food and beverage products, it remains to be seen if consumers will be willing to pay up for these more premium products, especially in today's inflationary environment and more price-sensitive consumer base," said Arun Sundaram, analyst at CFRA Research.

Laguarta also said on Thursday the company would be entering the "liquid protein" space, as protein shakes grow increasingly popular.

He also said the company would be adding protein options to its popcorn brand PopCorners and Quaker snacks.

(Reporting by Jessica DiNapoli in New York and Juveria Tabassum in BengaluruEditing by Marguerita Choy)