Shoppers at the grocery store often fill their baskets with a variety of snacks from major producers like Nestle, Pepsico, and Mondelez International. Pepsico, in particular, is known for its popular brands such as Frito-Lay’s Doritos, Cheetos, and Lay’s potato chips, which have a strong presence in the market.
However, recent reports show that sales of snack foods are on the decline. Pepsico experienced a 0.2% decrease in revenue in the fourth quarter of 2024, with Frito-Lay’s sales volume dropping by 3%. This trend is attributed to factors such as inflation, higher borrowing costs, and a shift in consumer focus towards health and wellness.
The decline in sales has led to operational downsizing for snack manufacturers. Even other major players like The JM Smucker Co., which acquired Hostess for $5.6 billion in 2023, have seen a decline in sales within their Sweet Baked Snacks business.
J.M. Smucker reported below-expectation third-quarter results in January 2026, particularly in the sweet snack category. Mark Smucker, CEO of J.M. Smucker, acknowledged that the path to stabilization in Sweet Baked Snacks is taking longer than anticipated.
Furthermore, the snack industry faced further challenges as CandyWarehouse.com Inc. filed for Chapter 11 bankruptcy in 2025 due to a significant drop in revenue earlier that year.
In response to lagging demand, Pepsico announced the closure of its Frito-Lay distribution facility in Rancho Cucamonga, Calif. The company plans to balance its production with demand by relocating operations to a new distribution center in the community. This move follows the closure of several other manufacturing and distribution facilities across the nation since 2024.
Notably, Pepsico closed its Orlando, Fla., manufacturing plant and onsite warehouse in November 2025, resulting in the layoff of 454 workers. The company also shut down the Liberty, N.Y., PopCorners manufacturing plant in June 2025, laying off 287 employees.
Overall, the snack industry is facing challenges due to changing consumer preferences and economic conditions. Companies like Pepsico are adapting by restructuring their operations to align with market demands and ensure long-term sustainability.
