*

Also expands use of avocado/olive oil instead of

canola/soybean

oil

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Move comes amid push from Kennedy to ditch synthetic dyes

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Uncertain if consumers will pay up for more premium

products

By Jessica DiNapoli and Juveria Tabassum

July 17 (Reuters) - PepsiCo ( PEP ) is planning to

highlight what will no longer be in its potato or tortilla chips

- artificial colors or flavors - when it re-launches its Lay's

and Tostitos brands later this year, executives said on

Thursday.

The overhaul for the company's top-selling snack brands

comes as U.S. Health Secretary Robert F. Kennedy Jr. pushes

Americans to eat "whole foods" and pressures manufacturers to

ditch dyes.

U.S. food makers have been announcing plans to remove dyes from

their products and introduce new ones without the colors under

pressure from Kennedy and the Make America Healthy Again (MAHA)

social movement backing him.

"We're trying to elevate the real food perception of Lay's.

If you think about the simplest and most natural snack, it is a

potato chip; it's a potato, it's oil, and it's a little bit of

salt-the most simple, no artificial ingredients," said CEO Ramon

Laguarta in a call with investors.

The company also said it was expanding use of avocado and

olive oil across its brands, rather than the canola or soybean

oil it uses. The MAHA movement has questioned the health

benefits of certain food oils.

In April, PepsiCo ( PEP ) said it planned to migrate its entire

portfolio to natural colors, or give consumers the option to

have a product without a synthetic dye. Its Cheetos snacks and

Gatorade drinks rely on synthetic dyes for their bright hues.

It already offers Lay's and Doritos without artificial

colors or flavors under its Simply segment.

"The Simply line extension for existing chip brands is still

in early innings - consumers have not engaged so far, and given

that, it will be seen how consumers react to a rebranding of

Lay's and Tostitos over the next couple of quarters," said

Christian Greiner, F/m Investments senior portfolio manager.

COSTLY PREMIUM PRODUCTS?

The soda pop maker also said on Thursday it would use sugar

in its products like Pepsi beverages if consumers want it.

On Wednesday, President Donald Trump said Coca-Cola

will start using cane sugar in its beverages in the U.S., a

dietary preference of Kennedy's MAHA movement. Both Pepsi and

Coke use high-fructose corn syrup for their sodas, which is

generally more cost-effective.

The moves come at a time when packaged food companies like

PepsiCo ( PEP ) are seeing consumers reel in their spending after the

industry raised prices over the years since the COVID-19

pandemic to shield their margins.

PepsiCo ( PEP ) has been offering more products at lower price points

and smaller pack sizes in its food segment to meet the demand

for affordable snacks.

"While there is clearly demand for cleaner ingredients in food

and beverage products, it remains to be seen if consumers will

be willing to pay up for these more premium products, especially

in today's inflationary environment and more price-sensitive

consumer base," said Arun Sundaram, analyst at CFRA Research.

Laguarta also said on Thursday the company would be entering

the "liquid protein" space, as protein shakes grow increasingly

popular.

He also said the company would be adding protein options to

its popcorn brand PopCorners and Quaker snacks.