Core Insights - PepsiCo's Frito-Lay snacks division is facing significant challenges, including pricing issues, underperformance in growing snack categories, and limited exposure to protein snacks [1][2][5] - The company's stock has declined nearly 6% year-to-date, contrasting with a 14% increase in the S&P 500 [1] - Activist investor Elliott Investment Management has acquired a $4 billion stake in PepsiCo, advocating for brand innovation and efficiency improvements, which could potentially increase the share price by 50% [2] Pricing and Demand Issues - Frito-Lay has experienced flat volume growth for two years despite an 8% compound annual growth rate from 2019 to 2023, with consumers reacting negatively to double-digit price increases [3][4] - The affordability issue is particularly pronounced among low and middle-income consumers, leading to a decline in sales of family-size bags while single-serve packs continue to grow [4] Market Position and Competition - Frito-Lay's heavy reliance on salty snacks, which constitute about 90% of its volumes, poses a challenge as consumer preferences shift towards healthier options, including protein-rich snacks [5] - Currently, protein-based snacks represent approximately 13% of the snack aisle, but PepsiCo's exposure is only 1% [5] - The company faces a strategic decision: to lower prices and potentially sacrifice short-term earnings or risk losing market share to competitors like Mondelez International and Campbell's [6]