McKinsey Told You Disruptors Are Winning CPG. PepsiCo Just Showed You Why.

Picture it.

Friday at work, you just smashed out everything on your todo by 10am, and have the rest of the day to browse LinkedIn.

Then, you get hit with this glorious report in your feed.

Its already old, from January 2026.

Late to the party? Maybe.

McKinsey, giving you the truth, telling you and every CPG board that disruptor brands are eating their lunch.

They identified five archetypes of disruption.

Six defining traits of disruptor brands.

They named 33 disruptors in salty snacks alone.

Twelve of them with more than $500 million in annual revenue.

But these reports are just the top of the funnel, or, written by Claude.

Not a single unit cost.

Not one margin number.

Not one mention of what it actually costs to be a disruptor.

Well, now your Friday’s locked in, you dive a bit deeper, and found Bloomberg ran a different story.

PepsiCo's Frito-Lay division, the most dominant snack company on the planet (Doritos cheese supreme, how you doing babe) just lost $50 billion in market value.

The reason?

They charged $7 for a bag of Doritos.

Digging deeper, you found Frito-Lay controls nearly 60% of the US salty snacks market.

They had 53 consecutive quarters of revenue growth.

They had pricing power that most CPG companies would trade a limb for.

And they used it to literally price themselves out of their own category.

McKinsey's report reads like it was written in a parallel universe where this didn't happen. Where the biggest story in CPG this decade isn't that the incumbent blew itself up, but that the disruptors had really good Instagram and knows how to use snap and tiktok.

You Choose To Be Salty

Fair play to McKinsey. The framework isn't wrong. It's just incomplete. I understand this is top of the funnel to get the board members salivating for more.

Their report analysed over 40 CPG categories.

The headline finding: overall CPG growth has been decelerating since 2022, but disruptor brands (defined as 25%+ CAGR over five years or $200M+ in revenue with strong growth) are capturing a disproportionate share of whatever growth is left - I read it more as, maybe you fucked up.

You’re either a sweet or salty person.

Salty snacks, the superior $103 billion category, listed 33 disruptor brands in this report.

CHOMPS, Quest Nutrition, Dots Homestyle Pretzels, Siete, Nature's Bakery to name a few.

In refrigerated foods, disruptors like Kevin's Natural Foods, Amylu Foods, and Real Good Foods now drive about 23% of category growth.

In frozen, TrüFrü grew revenue 20x in five years (or 7? my math ain’t mathing).

McKinsey distilled the disruptor playbook into six traits:

• Bold and culturally relevant messaging (lol)
• Unique physical sales strategy
• Distinctive product innovation
• Digital fluency
• Speed and agility
• Consumer-centric purpose (double lol)

Read that list again. Notice what's missing.

No mention of pricing.

No mention of unit economics.

No mention of the gap that incumbents created by jacking prices 50% during a pandemic and never bringing them back down.

No mention of what it actually costs to disrupt a $103 billion category.

Six traits. Zero math.

That's the most McKinsey thing I've ever read.

Number Go Up

To understand why McKinsey's framework misses the point, you need to understand what happened at Frito-Lay between 2020 and 2026.

The short version: number go up.

During COVID, PepsiCo raised prices across the Frito-Lay portfolio. Supply chain costs were up. Labour was up. Corn, oil, packaging, freight. Every CPG company did the same thing. Fair enough. Shit, every company was riding the high.

But then supply chain costs came back down. And PepsiCo kept the prices.

Because number go up, NO LIKE NUMBER GO DOWN.

A ‘party size’ bag of Doritos at Walmart went from $3.98 in 2021 to $5.94. Nearly 50% in four years. Some SKUs crossed $7. Frito-Lay's revenue surged 13% in 2021 and another 9% in 2022. The internal mantra was "Frito-Lay Five Forever," a long-running target of 5% annual revenue growth. They didn't just beat it. They blew past it.

And for a moment, the strategy looked genius.

Revenue up.

Margin up.

Number go up.

Investors happy.

Executives happy.

Everyone's happy.

Except the customer.

Here's the thing about pricing power: it works until it doesn't. And when it stops working, it stops all at once.

By late 2023, volumes started slipping. Frito-Lay's Q4 2023 North America revenue fell 3% to $7.47 billion. Volume was down. Customers were switching to private label. Switching to Takis (which burn so good, and I have to pay wild import fees just to get a taste). Switching to whatever was cheaper. Q2 2024, volume dropped another 4%.

Walmart had been telling PepsiCo for more than a year that prices were too high. PepsiCo nodded politely and did nothing. Tried shrinkflation instead. Fewer chips in the bag. Offered short-term promos. Launched health-conscious SKUs with more protein and fibre. Did everything except the one thing customers were asking for.

Lower the price.

Because number must go up. Number no like go down.

Walmart got tired of asking. They responded the only way a retailer can: they cut Frito-Lay's shelf space. Gave the end of aisle displays to their own Great Value brand. Gave shelf space to competitors. Takis. Store brand. Anyone who wasn't charging $7 for corn and flavouring.

Frito-Lay missed internal revenue targets by over $1 billion. Two years in a row.

By September 2025, PepsiCo's stock was down 22% from its May 2023 peak. Market cap had cratered by more than $50 billion. Elliott Investment Management, the activist hedge fund, took a $4 billion stake and arrived with a list of demands.

The first one: make your products affordable.

In February 2026, PepsiCo finally announced price cuts of up to 15% on some salty snacks. CEO Ramon Laguarta called them "very surgical."

Surgical.

After losing $50 billion in market value, two years of missed targets, and your biggest retail partner literally taking your shelf space away. Surgical.

The new head of PepsiCo's US Foods division, Rachel Ferdinando, said at a March conference: "Consumers have been clear: Affordability has never mattered more."

Consumers had been clear since 2023. PepsiCo wasn't listening. Because number go up.

What Mckinsey Missed

McKinsey names CHOMPS as one of 33 disruptor brands in salty snacks.

Here's the story they don't tell you.

Two dudes started CHOMPS in 2012 with $6,500.

A side hustle.

Grass-fed beef sticks.

First year revenue: $35,000.

Second year: $100,000.

They didn't quit their jobs until the business was consistently profitable at $400,000 a year - This is the type of story everyone should listen to.

In 2016, they sent free product to Trader Joe's.

A "free fill."

No slotting fee.

Just boxes of meat sticks and a hope.

Trader Joe's placed a $1.1 million purchase order. Revenue went from $400,000 to $4.3 million in one year.

They bootstrapped to $100 million in revenue before taking a cent of outside capital. In January 2022, Stride Consumer Partners invested $80 million at a $200 to $300 million valuation.

The founders kept majority control - This is like CPG heaven.

By 2024, revenue was around $660 million. By 2025, Forbes estimates they were tracking toward $900 million. Valuation north of $1 billion.

Two million meat sticks sold per day. 50,000 retail doors. 90% of revenue from three SKUs.

And here's the number McKinsey would never put in a deck: Guesstimate 7% EBITDA margin.

$50 million EBITDA on $660 million revenue.

That's tight.

CHOMPS makes grass-fed beef sticks. Their raw material costs are genuinely high. Beef is not corn. They don't have PepsiCo's ingredient economics. They can't make product for cents on the dollar.

So they don't charge $7 for it and pretend the margin is earned.

CHOMPS won in salty snacks because they built a product people wanted at a price people would pay. 40% repeat purchase rate. 50,000 retail doors. Three SKUs doing 90% of the work. No elaborate "culturally relevant messaging" strategy. No McKinsey-approved disruption archetype. Just a better product, a fair price, and relentless execution.

McKinsey would call this "distinctive product innovation" and "consumer-centric purpose."

An operator would call it: they made something good, listened to customers and didn't overprice it.

The House Incumbents Built

Here's what McKinsey's framework fundamentally misses.

Disruption in CPG is not a capability gap. It's a pricing gap. And incumbents create it themselves.

Think about the timeline. PepsiCo pushes Doritos to $7. Customers balk. Walmart cuts shelf space. That shelf space goes to competitors. CHOMPS, Takis, private label, whoever shows up with a reasonable price and a decent product.

The disruptor didn't create that shelf space.

PepsiCo vacated it.

McKinsey describes six traits of disruptor brands. Bold messaging. Digital fluency. Product innovation. Speed and agility. All real. All true. But none of them matter if the incumbent just prices normally.

PepsiCo with a 15% price increase instead of 50% probably keeps most of that shelf space. Keeps most of that $50 billion in market cap. Keeps most of those disruptors as niche players doing $20 million in revenue instead of $500 million.

The "disruption" didn't happen because CHOMPS had a better TikTok. It happened because the incumbent got drunk on pricing power and left the door wide open.

This is the structural reality in CPG that no consulting deck will spell out, because the people commissioning those decks are the ones who made the pricing decisions.

Frito-Lay's product costs are absurdly low.

Corn, oil, flavouring, packaging. This is a number I can firmly say is made up, but a guess would be sub-$1 COGS for most SKUs. When you push a product from $3.98 to $5.94, and your COGS hasn't moved much, you're not building a moat. You're building a bridge. And every competitor in the category is walking across it.

The math is simple. Every dollar of price increase above what the consumer tolerates is a dollar of opportunity you're handing to someone else. Not metaphorically. Literally. Walmart took PepsiCo's end cap displays and gave them to cheaper brands.

That's not a consulting framework.

That's a buyer at Walmart making a merchandising decision.

Two Worlds, Same Deck

McKinsey's report will land on tables at every major CPG.

The board member reads: "We need to be more digitally fluent and culturally relevant. We need speed and agility. Let's hire a Chief Disruption Officer. Lets get Kylie Jenner in the ads. "

The operator reads: "We need to stop charging $7 for a bag of chips."

The board member reads: "Disruptors have six defining traits we should emulate. Let's invest in our innovation pipeline and community engagement. Where is Kylie."

The operator reads: "We created the disruption opportunity by treating pricing power as a one-way ratchet. Number go up. Number no like go down. And now we're surprised the number went down anyway."

The board member reads: "33 disruptor brands in salty snacks is a serious competitive threat. SERIOUSLY, HAS ANYONE SEEN KYLIE."

The operator reads: "33 brands walked through the door we held open for them."

The McKinsey framework treats disruption as something that happens to incumbents. External force. New entrants with better strategies and cooler branding.

The Doritos story tells you what actually happens.

Incumbents do it to themselves, then read a report about how its not their fault, its the damn internet kids, their snaptoks and twitfaces.

PepsiCo had 60% market share. They had distribution infrastructure that would take a startup 20 years to replicate. They had brand recognition that money literally cannot buy. They had every structural advantage in the category. And they torched $50 billion in value because they couldn't stop raising prices.

Number go up. Until it doesn't.

CHOMPS didn't beat PepsiCo with bold culturally relevant messaging. They beat them by making a good product at a fair price while PepsiCo was busy charging $7 for corn dust.

The Lesson

If you run a CPG brand, the McKinsey report is worth reading. The archetypes are useful. The traits are real. Disruptors do tend to be more agile, more digitally native, more connected to their communities.

But none of that is the reason they're winning.

They're winning because incumbents are pricing themselves into irrelevance. Because "number go up" became the strategy instead of the outcome. Because executives who spent 2021 and 2022 celebrating record revenue were actually celebrating the beginning of the end of their pricing credibility.

The lesson isn't "be more like a disruptor." The lesson is "stop creating the conditions for disruption."

Price your products like you want customers for the next decade, not like you want to hit this quarter's target. Treat your retail partners like partners, not ATMs. And when Walmart tells you your prices are too high, listen the first time. Not two years and $50 billion later.

Next time a McKinsey deck lands on your desk telling you to worry about disruptors, check your price tags first.

Shout out to all the legends I've ripped info from for this piece:

McKinsey | Bloomberg | Fortune | Forbes | Inc. | Noah Kagan | PepsiCo Annual Report