PepsiCo announced on Monday a deal with activist investor Elliott Investment Management to cut prices and eliminate nearly 20 percent of its product offerings by early next year, aiming to redirect savings toward marketing and enhanced consumer value amid challenges in its North American operations.
The company, known for producing Frito-Lay snacks such as Cheetos and Tostitos along with various beverages, did not specify which products would face elimination or the extent of the price reductions. This initiative follows pressure from Elliott, which acquired a $4 billion stake in PepsiCo during September. In a letter addressed to the company’s board, Elliott highlighted issues including a lack of strategic clarity, slowing growth rates, and declining profitability within PepsiCo’s North American food and beverage divisions. These concerns prompted the collaborative agreement announced on Monday.
PepsiCo’s recent history underscores the pressures leading to this plan. In February, the company issued a warning that prolonged double-digit price hikes over several years, combined with evolving customer preferences, had diminished demand for both its snack and beverage lines. To address perceptions of high pricing, PepsiCo expanded distribution of more affordable brands in July, including Chester’s and Santitas, making these options available through additional retail channels to appeal to cost-conscious consumers.
Under the new strategy, PepsiCo intends to hasten the rollout of innovative products featuring simpler and more functional ingredients. Among these are Doritos Protein, designed to offer a higher protein content for health-focused eaters, and the Simply NKD lines of Cheetos and Doritos, which exclude artificial flavors and colors to meet demands for cleaner labeling. Additionally, the company has recently launched a prebiotic-infused version of its flagship cola, incorporating dietary fibers to support gut health as part of broader functional beverage developments.
In a joint statement released with PepsiCo, Elliott partner Marc Steinberg voiced support for the direction. “We appreciate our collaborative engagement with PepsiCo’s management team and the urgency they have demonstrated,” Steinberg said. “We believe the plan announced today to invest in affordability, accelerate innovation and aggressively reduce costs will drive greater revenue and profit growth.” Elliott expressed intentions to maintain close collaboration with PepsiCo moving forward to implement these measures effectively.
Following the announcement, PepsiCo’s shares remained unchanged in after-hours trading. The company forecasted organic revenue growth of 2 percent to 4 percent for 2026, building on a 1.5 percent increase in organic revenue recorded over the first nine months of the current year. This projection reflects expectations tied to the cost-saving and innovation efforts outlined in the deal.
Beyond product and pricing adjustments, PepsiCo plans to conduct a thorough review of its supply chain to identify efficiencies and potential optimizations. The company also commits to ongoing adjustments in its board composition, prioritizing the addition of global leaders equipped to advance objectives in growth and profitability. PepsiCo Chairman and CEO Ramon Laguarta commented on these steps in a statement: “We feel encouraged about the actions and initiatives we are implementing with urgency to improve both marketplace and financial performance.”
