While activist investment fund Elliott Management has secured a stake worth about $4 billion in PepsiCo, PepsiCo has announced plans for a large-scale restructuring, including a review of its supply chain, product cuts and a reduction in its North American workforce.
PepsiCo unveiled a new operational plan backed by Elliott, saying it would withdraw about 20% of its product line-up in the U.S. from the market and overhaul its supply chain. “The measures will boost organic sales growth from 2026, reduce productivity and improve core operating margins,” CEO Ramon Laguarta said in a statement.
Elliott’s partner Mark Steinberg said the plan, which includes expanding investment in more affordable products, “will simultaneously increase PepsiCo’s sales and profitability.”
PepsiCo presented an organic sales growth forecast for fiscal 2026 at 2-4%. This is the actual business-based growth rate excluding acquisitions and exchange rates, which is similar to the market estimate (about 2.7%).
According to Bloomberg, the restructuring process has also begun. PepsiCo ordered employees of several North American offices, including its Putcher headquarters in New York, Chicago and Texas Plano, to work from home this week. U.S. companies often restrict employees from going to work just before large-scale job cuts are announced.
In an internal message to employees, CPO Jennifer Wells said “structural changes in the company will impact some jobs,” suggesting layoffs are imminent.
Elliott disclosed its stake in PepsiCo in September, criticizing the company’s portfolio for being overly complex and for continuing to decline in its share in the beverage sector. Elliott pointed to PepsiCo to consider selling carbonated water brands “SodaStream,” lemon lime soda “Starry,” some cereal products (Life, Captain Crunch, etc.), and grain and food brands such as Quaker Haute and Lysaroni.
Additionally, PepsiCo’s own bottling business has been mentioned as a candidate for sale. PepsiCo is operating its own bottling plants in some regions while utilizing a network of independent bottlers, which investors have been pressuring to simplify.
PepsiCo has been speeding up cost savings and manufacturing system modernization in recent years. In November, it closed two Frito-Lay plants in Orlando, Florida, laying off more than 450 people. PepsiCo said at the time that it was a “decision based on business needs.”
PepsiCo’s number of employees has increased by about 20% since 2019, and some analysts say that the current restructuring is a measure to normalize the workforce that has increased since COVID-19.
PepsiCo’s stock price is down about 5% this year. Its market capitalization is close to about $200 billion. Elliott has been calling for an aggressive restructuring, arguing that PepsiCo has an inefficient cost structure compared to its competitors and that its business portfolio is not properly concentrated. The announcement is considered to have largely accepted Elliott’s demands.
JULIE KIM
US ASIA JOURNAL
