PepsiCo to cut costs, review North America supply chain after talks with Elliott

USA – PepsiCo has announced a comprehensive review of its North America supply chain and outlined major cost-cutting actions following extensive discussions with activist investor Elliott Investment Management.  

The move comes after Elliott revealed a US$4 billion stake in the company in September and urged the beverage and snacks giant to consider structural changes, including refranchising or separating its bottling operations and divesting non-core assets within its food business. 

As part of its new strategic plan, PepsiCo said it aims to improve affordability across its product portfolio, streamline ingredients in its snack offerings, and reduce operational expenses.  

The company plans to cut nearly 20 per cent of its U.S. product lines by early next year and shutter several manufacturing lines to reduce costs and simplify operations. 

PepsiCo also intends to expand its lineup with products featuring simpler and more functional ingredients. Among the offerings highlighted are Doritos Protein and Simply NKD varieties of Cheetos and Doritos, which contain no artificial flavors or colors.  

The company has additionally launched a prebiotic version of its signature cola as part of its innovation efforts. 

In a joint statement, Elliott Partner Marc Steinberg expressed confidence in PepsiCo’s newly announced plan, stating that the investor group believes the outlined measures will enhance revenue and profit growth.  

Steinberg noted that Elliott values its constructive dialogue with PepsiCo’s leadership and supports the company’s commitment to affordability, innovation, and aggressive cost reduction. 

PepsiCo added that it will continue making adjustments to its board, with a focus on attracting global leaders capable of supporting its long-term growth and profitability objectives.  

Chairman and CEO Ramon Laguarta said the company is encouraged by the actions underway and remains focused on improving both market performance and financial outcomes. 

The company has faced pressure in recent years as persistent, double-digit price increases and shifts in consumer preferences have led to softer demand across its beverage and snack divisions.  

Earlier this year, PepsiCo emphasized efforts to combat perceptions of high pricing by increasing distribution of lower-cost value brands, including Chester’s and Santitas. 

Separately, PepsiCo instructed employees across several North American offices—including its Purchase, New York headquarters, Chicago, and Plano, Texas—to work remotely this week as the company prepares to implement structural changes. 

According to a message from Jennifer Wells, chief people officer for North America, the adjustments will affect certain roles within the organization. 

In November, PepsiCo announced plans to close Frito-Lay operations in Orlando, Florida, resulting in more than 450 layoffs. The company stated at the time that the decision was based on business needs but did not specify which product lines would be discontinued. 

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