The trend: Budget pressures, increased GLP-1 drug adoption, evolving government policies, and a growing preference for healthy eating are reshaping consumer grocery habits—forcing CPG giants like PepsiCo to rethink their strategy in order to remain competitive.

The situation: While PepsiCo had a solid Q2, beating expectations for both revenues and profits, its North American business remains challenged as consumers—whether on GLP-1s or not—cut back on snacks and sugary drinks and prioritize value.

• Volumes for Pepsi’s North America food and beverage segments declined 1% YoY and 2% YoY, respectively.
• The company is reworking its portfolio to entice shoppers with more high-protein and “better for you” options, as well as offering more products at entry-level price points.
• Those efforts are helping PepsiCo to improve “execution and competitiveness in key subcategories and channels,” CEO Ramon Laguarta said in a statement.

GLP-1 use hits grocery spending: Pepsi, like many food companies, has been understandably measured about the impact GLP-1s are having on sales. Still, there are indications that their growing adoption is taking a toll. Food spending among GLP-1 users has declined by over $6.5 billion, according to a report from Big Chalk Analytics, with some categories vulnerable to volume declines of as much as 2.9%.

• Roughly 1 in 9 US adults are currently on GLP-1s, while another 8.3% are considering starting a treatment plan in the next 12 months.
• Those on the weight-loss drugs consistently choose smaller pack sizes more often than the average US consumer in every product category tracked by Big Chalk—although that trade-down behavior could also reflect budget constraints.
• Regardless of what’s driving the shift, Pepsi expects portion control “to be critical going forward,” Laguarta said on the company’s earnings call, and will continue to offer smaller portion sizes to accommodate demand.

Make America healthy again: With both government agencies and consumers eyeing product labels more closely, Pepsi—along with the broader CPG industry—is moving quickly to remove contentious ingredients like artificial dyes, while ramping up its “functional” assortment.

• Pepsi plans to remove artificial flavors and colors from its Lay’s and Tostitos lineup by the end of the year, as well as introduce versions of Cheetos and Doritos that strip out those ingredients.
• The company is gearing up for a “big push to protein” for its beverage business, where it sees an opportunity to capitalize on fast-growing demand, and will reformulate certain snack products to increase their protein, fiber, and whole grain content.
• Despite presidential pressure on rival Coca-Cola to swap out corn syrup for cane sugar, Pepsi made it clear that any changes to its ingredient strategy will ultimately be determined by consumer preferences.

Our take: The food industry is in a state of flux, with companies frantically adjusting their portfolios to accommodate shifts in eating and drinking behaviors. Speed is of the essence—brands must adapt to consumer demand for high-protein products and simplified labels.

Still, offering the right products alone isn’t enough. Without a compelling value proposition, brands risk losing ground to private labels and health-focused upstarts, especially as tariffs strain buying power.

Go further: Read our report on the Impact of Weight Loss Drugs 2025.