The company, known for brands such as Smith’s and Twisties, is dealing with a worsening potato shortage. Frozen chip producers are increasing local processing after previously depending on imports, placing strain on Australia's already limited potato stock. As demand increases, raw potato prices have jumped by as much as 10%, affecting the wider snack industry.
Strict biosecurity rules in Australia mean raw potatoes cannot be imported, so all must be grown locally. However, potato farming is costly and time-intensive. Growers also face production risks and unstable costs. Despite higher demand, output has not grown significantly, leaving companies like PepsiCo, which produces nearly 900 million snack packs each year, under considerable pressure.
Consumer habits are also shifting. While Australians continue to buy snacks despite economic uncertainty and rising costs, growth in overall value has slowed. Consumption remains stable but has not led to higher revenue. In response, snack makers are investing in innovation, introducing new formats like mini chip cans and hybrid biscuit-snack items to attract shoppers and improve shelf visibility.
These product developments aim to help PepsiCo maintain its market position amid cost-of-living pressures and a tight supply chain. However, local manufacturing expenses and rising energy prices are putting long-term sustainability at risk. As a result, the company is pushing for greater government support to boost domestic production and capital investment.
