Summary
Highlights
Doritos, once the leading chip brand in America, is facing a significant downturn. Its owner, Pepsico, has lost $60 billion in market value, and Frito-Lay, responsible for Doritos, has seen five consecutive quarters of declining sales. Activist investors are now stepping in to try and save the company. The video explores the reasons behind Doritos' fall from grace, emphasizing that it's not due to the beloved Cool Ranch flavor.
The story of Doritos began in 1964 at Disneyland, where Frito-Lay operated 'Casa de Fritos'. A supplier noticed that stale tortilla chips were being discarded and suggested refrying and salting them for sale. These 'new' chips became incredibly popular. An executive named Arch West saw the potential and launched Doritos nationwide in 1966. Doritos, meaning 'little bits of gold,' was the first to popularize the Mexican tortilla chip concept across the U.S., effectively creating a new food category. Peculiarly, Doritos are designed to melt in the mouth before the flavor registers, a technique that enhances their addictive quality due to their fat, salt, and sugar content.
Doritos expanded its flavors, introducing Taco in 1967 and the game-changing Nacho Cheese in 1972, which brought the now-iconic orange dust. Arch West, the visionary behind Doritos, was so intertwined with the brand that his family sprinkled Doritos dust on his grave. Throughout the 1970s and 1980s, Doritos dominated the snack aisle, with Cool Ranch Doritos launching in 1976. By the 1990s and 2000s, Doritos maintained an edgy and flavorful image. In 2006, they pioneered crowdsourced marketing with a Super Bowl commercial campaign, allowing young people to create their own ads. A major partnership with Taco Bell in 2012 led to the Doritos Locos Taco, becoming the most successful product launch in fast-food history, selling billions of units.
Around the 2010s, consumer tastes began to shift away from chemically produced, mass-produced, high-carb foods like Doritos, which were increasingly seen as unhealthy. As consumers aged, they considered Doritos 'kid food' and avoided giving it to their own children. Meanwhile, Frito-Lay, a division of Pepsico, was a major profit engine for the conglomerate, generating billions in sales but showing flat growth year-over-year. Pepsico itself faced headwinds with declining consumption of its traditional beverages. To maintain shareholder value, Pepsico, during the COVID-19 pandemic and subsequent inflation, prioritized profit over volume by implementing aggressive price increases on Doritos and other snacks.
Pepsico implemented unprecedented double-digit price increases for Doritos over seven consecutive quarters, pushing prices up by over 50% between 2021 and 2022. This led to accusations of corporate price gouging. Simultaneously, the company engaged in 'shrinkflation' by reducing the family-sized bag of Doritos from 9.75 oz to 9.25 oz in March 2022, a 5% decrease. Consumers, particularly Gen Z, vocalized their anger on social media platforms like TikTok, shaming Doritos for these practices. This erosion of trust, similar to what occurred with Five Guys, alienated a loyal consumer base. Frito-Lay experienced five straight quarters of volume decline in 2024.
The rise of generic store-brand chips that could replicate Doritos' flavors at a lower cost further compounded the problem. By raising prices significantly, Doritos repositioned itself as a luxury good, a concept that consumers found unappealing for a snack chip. In January 2024, European grocery chain Carrefour even delisted Frito-Lay products, including Doritos, due to 'insane' price increases. Despite this, Pepsico's revenue surged, reaching $90 billion by 2023, largely due to price hikes rather than increased sales volume. However, by 2024, this growth stalled, and the stock market punished Pepsico, causing a significant loss in market cap.
The emergence of GLP-1 weight-loss drugs like Ozempic and Wegovy further impacted Doritos. Walmart noted in 2023 that these drugs were reducing consumers' appetites for unhealthy foods, specifically those high in fat, salt, and carbs—the very category Doritos dominated. These drugs target brain receptors that drive cravings for such foods, making Doritos particularly vulnerable. In September 2025, activist investor Elliott Management stepped in, acquiring a nearly $4 billion stake in Pepsico. They pushed for a reduction in product portfolio and up to 15% price reductions, forcing management to address structural problems and acknowledge the massive damage done to the brand by short-term, profit-driven decisions. The executives responsible for these strategies were eventually replaced, leaving new management to rebuild consumer trust.