PepsiCo to streamline lineup, cut costs after deal with Elliott Management

PepsiCo has reportedly agreed to cut its US product lineup by 20 per cent and reduce costs after talks with Elliott Management, as the company tries to simplify its business

PepsiCo Inc. has reached a major agreement with activist investor Elliott Investment Management that will reshape its US product portfolio and push the company toward cost savings, including layoffs, Bloomberg reported. The deal marks an early step in PepsiCo’s effort to regain momentum, simplify its business and reassure investors after a period of sluggish performance.

 

As part of the plan, PepsiCo will reduce its US product lineup by 20 per cent and put stronger emphasis on affordability. The company, which owns brands like Mountain Dew and Doritos, aims to streamline operations and focus on items that deliver stronger and more consistent growth.

 

Elliott, which accumulated a $4 billion stake earlier this year, had been urging the company to simplify its structure. It raised concerns about PepsiCo’s wide range of brands and a declining share in the beverage market.

 

Marc Steinberg, partner at Elliott, said the plan “will drive greater revenue and profit growth”, according to a statement from PepsiCo. He added that Elliott will continue to stay engaged with the company.   

Stock performance, outlook for 2026

 

Despite the announcement, PepsiCo shares stayed mostly unchanged in extended trading. The stock has dropped 4.2 per cent so far this year through Monday, while the S&P 500 Index has gained 16 per cent over the same period, Bloomberg reported.

 

PepsiCo also provided a revised outlook for the financial year 2026. The company expects organic revenue to grow between 2 per cent and 4 per cent, compared with analysts’ expectations of roughly 2.7 per cent.

Remote work signals impending layoffs

 

PepsiCo told employees across several North American offices to work remotely this week, the report said. This applies to its headquarters in Purchase, New York, as well as offices in Chicago and Plano, Texas.

 

“We will be making structural changes to our business that will affect some roles in the company,” Jennifer Wells, chief people officer for North America, said in a message to staff, viewed by Bloomberg News.

 

CEO Ramon Laguarta has emphasised the need to lower costs, improve productivity and modernise manufacturing to free up resources for investment in growth areas. Layoffs had already been discussed by company executives before Elliott began pushing for changes.

 

In November, PepsiCo said it would shut down Frito-Lay facilities in Orlando, Florida, affecting more than 450 jobs. At the time, the company said the move was “driven by business needs".

Portfolio changes still unclear

 

PepsiCo has not disclosed which products it plans to discontinue. Elliott had earlier encouraged the company to simplify its beverage lineup by selling some brands, such as SodaStream and Starry. It also highlighted non-core food brands like Life and Cap’n Crunch cereals, Quaker Oats and Rice-A-Roni as possible candidates for divestment.

 

Although the agreement does not give Elliott a seat on PepsiCo’s board, Steinberg said the investor welcomed the company’s “commitment to board refreshment”.

 

PepsiCo recently appointed former Walmart executive Steve Schmitt as its chief financial officer.

 

Product updates already underway

 

Since Elliott disclosed its stake, PepsiCo has begun reshaping its products. It has updated Lay’s chips by replacing artificial dyes with natural ingredients and introduced new Doritos and Cheetos without synthetic dyes.

 

The company has also expanded offerings with more protein and fibre as it works to modernise its portfolio and appeal to changing consumer preferences.