Key takeaways:
- Snack sales remain high in value terms, but volume softness is forcing major manufacturers to consolidate capacity.
- Private label growth, promotional intensity and more selective consumer behaviour are squeezing branded mid-tier products.
- GLP-1 adoption and shifting health priorities are accelerating portfolio simplification and operational discipline across the industry.
PepsiCo’s decision to shutter two US snack facilities this year isn’t about the demise of crisps. It’s about a market recalibrating after years of price-led growth and a supply chain being reshaped to fit a more cautious consumer.
The owner of PepsiCo – whose North American foods arm includes Frito-Lay brands such as Lay’s, Doritos and Cheetos – has confirmed it will close its Rancho Cucamonga, California, distribution centre by 6 June 2026, affecting 248 workers under a WARN filing (the US Worker Adjustment and Retraining Notification Act requires companies to give advance warning of large-scale layoffs or plant closures). It’s also shutting an offsite warehouse in Orlando, Florida, by 9 May 2026, impacting 46 employees. These moves follow earlier closures in Orlando and Liberty, New York, alongside wider bottling and cereal consolidation since 2024.
PepsiCo has acknowledged that both volume and organic revenue in its North American foods division declined by 2% in fiscal 2025. That’s not dramatic by recession standards but for a scale-driven snacks powerhouse built on throughput and distribution muscle, it’s not trivial.
Chairman and CEO Ramon Laguarta described the backdrop as “a subdued consumer environment in North America”, telling investors on the 3 February 2026 earnings call : “We’re taking targeted actions to deliver more value to consumers, including price adjustments on certain brands, as we work to improve volume trends.” He added that the company is “driving productivity across the business and simplifying our portfolio to ensure we’re positioned to compete effectively in this environment.”
This is what a structurally ‘slower’ market looks like in practice. Not collapse; not empty shelves; but quieter demand, tighter margins and factories being switched off.
Volume is under pressure even as sales hold up
On paper, the market looks solid. According to SNAC International’s latest State of the Industry report, US snack sales reached $156bn, up 4.8%. But most of that uplift is price and mix, not people eating dramatically more crisps.
Circana has been clear in its 2026 outlook that recent CPG growth has been driven largely by pricing, with consumers staying highly value-conscious. Shoppers are switching between brands and private label, reacting sharply to promotions and adjusting pack sizes. Value versus volume is now the central fault line in snacks.
Inflation has forced shoppers to think harder about discretionary purchases. Promotions are back in force. Private label continues to gain share in many markets, particularly in Europe where it accounts for more than 40% of CPG value sales across major economies, according to Circana. Branded mid-tier SKUs are feeling the squeeze.
At the same time, demand is fragmenting. Protein-packed bites, fibre-rich options, portion-controlled packs and ‘permissible indulgence’ formats are picking up incremental space. Meanwhile, some traditional large-bag and sweet baked snack occasions are softening.
Overlay that with the rise of GLP-1 weight-loss medications and snack frequency becomes a commercial variable, not just a lifestyle trend. Retailers were the first to flag it. John Furner, president and CEO of Walmart US said the company is seeing “a slight pullback in overall basket – just less units, slightly less calories” among customers using GLP-1 drugs. When the largest retailer in the US sees measurable unit shifts, manufacturers pay attention.
Consultancies are now quantifying what that could mean longer term. Analysts at EY-Parthenon estimate that diet changes linked to GLP-1 adoption could strip as much as $12bn from US snack sales over the next decade, as consumers shift toward smaller portions and more nutrient-dense choices.
Even indulgence brands are acknowledging behavioural change. Peter ter Kulve, CEO of Magnum Ice Cream, said GLP-1 users are still treating themselves, but there has been “a stark reduction of mindless munching and binge eating.” That suggests occasion restructuring rather than outright elimination – fewer impulse grabs, more deliberate consumption.
PepsiCo has already signalled it will sharpen pricing and reduce the number of products it sells in response to weaker demand and investor pressure. Fewer SKUs, cleaner architecture, better alignment between production and pull-through.
Factories are the pressure valve
When volumes plateau, manufacturing networks also come under scrutiny. PepsiCo said its California operations would be shifted “to a new distribution centre in the local community to better serve our customers and consumers.” It’s corporate language for consolidation – fewer nodes, higher utilisation, streamlined logistics.
It’s also consistent with what’s happening elsewhere. JM Smucker Co, which acquired Hostess Brands for $5.6bn in 2023, has confirmed plans to close its Indianapolis Hostess plant as part of a broader network optimisation, consolidating production through 2026 as its Sweet Baked Snacks segment faces softer sales.
Campbell’s has announced it will close its Hyannis, Massachusetts potato chip plant this year, shifting production to other facilities under what it calls an ongoing snacks network optimisation strategy.
In California, Ferrara, owner of Jelly Belly, has said it will cease corporate operations in Fairfield from June 2026, cutting 69 roles while keeping manufacturing and its visitor centre in place. And in the UK, KP Snacks has proposed discontinuing Tyrrells vegetable crisps and closing its Uttoxeter manufacturing site, citing sustained demand decline and lost export volumes.
Different geographies, different portfolios but the same theme. Capacity is being tightened to reflect a market that isn’t expanding as easily as it once did.
A market adjusting to its new speed
What’s emerging is a two-speed snack economy. On one side is core, mainstream volume – highly promotional, sensitive to price gaps with private label and increasingly exposed to downtrading. On the other is premium and functional – protein bars, better-for-you bites, bold flavour innovation, sustainability-led propositions. These can deliver margin, but rarely the same scale as legacy mass brands.
That creates tension inside large portfolios. Protect share on the classics while investing in growth adjacencies. Rationalise slow-moving SKUs without hollowing out shelf presence. Maintain service levels while cutting fixed costs.
Plant closures are part of that balancing act. Consolidating into fewer, more modern facilities allows for higher automation, improved utilisation and lower logistics complexity. It also frees up capital for renovation and innovation rather than maintenance.
Investors, meanwhile, are demanding discipline as much as growth. Productivity savings, capital allocation and portfolio simplification now feature prominently in earning commentary. In a lower-growth environment, efficiency is as critical as innovaton.
PepsiCo’s 2% decline in both volume and organic revenue in North American foods may look modest. But in a business measured in billions, small percentage shifts translate into significant tonnage. The rational response is to adjust the footprint.
None of this suggests snacks are disappearing from shopping baskets. A $156bn US category doesn’t evaporate but the easy years are over. Price-led growth has limits. Consumers are choosier. Retailers are tougher. Private label is stronger.
The snacks market remains vast. It’s just structurally ‘slower’ – and increasingly run with that reality in mind.
