PepsiCo Strips Artificial Colors From Lay’s, Tostitos, But Retail Investors Remain Wary

PepsiCo (PEP) executives announced on Thursday that the soda and snacks giant would revamp its large brand platforms, such as Lay’s and Tostitos, to exclude artificial colors and flavors by the end of this year.

PepsiCo shares were up 1.6% in premarket trading after the company also forecast that it now expects a smaller drop in its annual core profit.

Retail sentiment on the stock improved to ‘bearish’ from the ‘extremely bearish’ territory a day ago, with chatter at ‘low’ levels, according to data from Stocktwits.

PepsiCo's move follows similar initiatives by other packaged food companies, such as Kraft Heinz and General Mills, which have announced plans to eliminate synthetic dyes from their products by the end of 2027.

Earlier this year, Health & Human Services Secretary Robert F. Kennedy Jr. outlined plans to eliminate six petroleum-based food dyes by 2026 as part of his “Make America Healthy Again” (MAHA) campaign, aiming to replace them with natural alternatives.

This is part of a broader effort to address chronic diseases and conditions, such as obesity, among Americans.

PepsiCo also acquired prebiotic soda brand Poppi for $1.95 billion to expand its healthy food offerings, as younger consumers in the U.S. are shifting away from traditional beverages and snacks toward healthier alternatives, such as sodas and energy drinks, which is a part of a broader trend toward fitness and lifestyle products.

“We plan to introduce extensions of Cheetos and Doritos that will contain no artificial colors or flavors,” CEO Ramon Laguarta and CFO Jamie Caulfield said in the prepared remarks.

They added that the company will also expand the use of avocado or olive oil across specific brand platforms and enhance certain products with protein, fiber, and whole grains later this year and into next year within Frito-Lay and Quaker portfolios.

As part of efforts to reduce supply costs tied to U.S. President Donald Trump, the executives said on Thursday PepsiCo expects incremental supply chain costs for the balance of 2025 and is implementing mitigation strategies to partially reduce these.

PepsiCo now expects a 1.5% decline in core earnings per share for 2025, compared with the 3% estimated earlier.

A bullish user on Stocktwits said, “PEP we back in business,” after second-quarter profit and sales topped Wall Street expectations.

PepsiCo’s shares have fallen nearly 11% year-to-date and have declined over 20% in the last 12 months.

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