PepsiCo announced Monday that it will cut prices, streamline its product portfolio, and shift toward simpler, more functional ingredients as part of a sweeping operational overhaul negotiated with Elliott Investment Management, the activist hedge fund that recently acquired a $4 billion stake in the company.
Under the agreement, PepsiCo will eliminate nearly 20% of its product offerings by early next year. The company has not revealed which brands or SKUs will be discontinued, nor the exact scale of price reductions. PepsiCo said the consolidation will free up capital to reinvest in marketing, affordability initiatives, and product innovation intended to win back cost-conscious consumers.
The changes arrive after Elliott criticized PepsiCo for what it called “decaying strategic clarity,” slowing revenue growth, and weakening profitability in its core North American beverage and snack divisions. Those business lines include flagship brands such as Pepsi, Mountain Dew, Gatorade, Cheetos, Doritos, and Tostitos.
In its letter to PepsiCo’s board, Elliott argued that inconsistent pricing strategy and a bloated product lineup have diluted brand focus and contributed to softening demand. PepsiCo, which raised prices in double-digit increments over multiple years, acknowledged earlier this year that consumer pushback and shifting preferences have hurt sales volume.
As part of the restructuring, PepsiCo will accelerate development of “cleaner” and more functional products, including:
- Doritos Protein, a high-protein snack option
- Simply NKD Cheetos and Doritos, containing no artificial colors or flavors
- A prebiotic Pepsi cola, aimed at health-oriented consumers
These efforts align with broader industry trends, where major food and beverage companies are adapting portfolios to reflect consumer preference for clarity in ingredients, reduced artificial additives, and functional wellness benefits.
Elliott Partner Marc Steinberg praised PepsiCo’s response, saying the investor group appreciates the “urgency” demonstrated by management. Elliott signaled it will remain closely involved as the company implements reforms.
PepsiCo’s share price remained flat in after-hours trading following the announcement, suggesting investors are cautiously absorbing the implications of product cuts and strategic realignment.
The company projects organic revenue growth of 2–4% in 2026, a modest improvement from the 1.5% organic revenue growth reported in the first nine months of 2025. PepsiCo leadership also highlighted ongoing supply chain reviews and forthcoming changes to its board. The emphasis is on bringing in global executives with experience in scaling operations, optimizing cost structures, and reversing declines in profitability.
PepsiCo CEO Ramon Laguarta said the company is “encouraged” by the new initiatives and emphasized that improving both financial and marketplace performance is an urgent priority. He pointed to enhancements in affordability and innovation as critical to regaining consumer trust and stabilizing demand.
Part of PepsiCo’s challenge is perception. After several years of steep price increases, many shoppers view PepsiCo products—particularly Frito-Lay snacks—as overpriced. In response, the company is expanding lower-cost offerings such as Chester’s and Santitas, which have become increasingly important as households seek budget-friendly alternatives.
The roadmap announced Monday represents one of PepsiCo’s most significant restructurings in years, driven by both external investor pressure and evolving consumer behavior. The success of the initiative will depend on whether streamlined product lines, more transparent ingredients, and price optimizations can reverse declining volume trends and strengthen long-term brand equity.
Pros
- Sharper Strategic Focus
Eliminating 20% of products may reduce complexity, streamline operations, and improve profitability. - Commitment to Affordability
Price cuts and value-line expansion could help recover consumers lost to cheaper alternatives. - Innovation in Ingredients
Cleaner-label and functional products align with strong market trends, potentially opening new revenue channels. - Shareholder Reassurance
Activist involvement may strengthen fiscal discipline and operational performance.
Cons
- Risk of Consumer Backlash
Discontinuing popular or niche products could alienate loyal customers. - Short-Term Revenue Impact
Price reductions may pressure margins before cost savings fully materialize. - Dependence on Activist Oversight
Heavy influence from Elliott may push short-term gains at the expense of long-term brand development. - Uncertain Effectiveness
Product simplification and ingredient shifts may not be sufficient to overcome softness in demand.
Future Projections
Short-Term:
- Expect price adjustments on select products and widespread SKU reduction by early next year.
- Marketing campaigns will likely emphasize “real ingredients,” function, and affordability.
Medium-Term:
- PepsiCo may prioritize high-growth categories like functional beverages, protein snacks, and clean-label options.
- Additional operational restructuring could follow if performance targets are not met.
Long-Term:
- If successful, PepsiCo’s streamlined portfolio may improve profitability and competitive positioning.
- Failure to restore demand could invite deeper activist intervention or broader restructuring.
References & Further Reading
Associated Press – PepsiCo to cut prices and products after activist pressure
https://apnews.com/
Bloomberg – Elliott Investment Management’s stake and strategic push
https://www.bloomberg.com/
Reuters – PepsiCo financial outlook and consumer demand challenges
https://www.reuters.com/business/
CNBC – Analysis of food and beverage sector pricing trends
https://www.cnbc.com/consumer/
Wall Street Journal – Activist investor influence on major U.S. corporations
https://www.wsj.com/
Food Business News – Innovation trends in snacks and beverages
https://www.foodbusinessnews.net/
