Activist investor Elliott Investment Management has taken a roughly $4 billion stake in PepsiCo Inc (NYSE:PEP), making it one of the company’s top five active shareholders.
Elliott is pressuring the beverage and snack giant to pursue strategic changes as its market value has slid more than 25% since peaking at $270 billion in May 2023.
The company’s snack division, historically a strong growth driver, is also facing mounting challenges.
Citing industry analysts, the WSJ report points to several factors behind PepsiCo’s struggles, including tariffs, growing price sensitivity among consumers, and what some distributors describe as the company’s focus on its food portfolio at the expense of its beverage unit.
Once a formidable rival to Coca-Cola Inc. (NYSE:KO), PepsiCo has seen its position in the U.S. soda market weaken. Its flagship soda brand now ranks fourth in U.S. sales, trailing Coca-Cola, Dr Pepper, and Sprite, the Wall Street Journal noted, citing Beverage Digest data.
To reverse the declining beverage sales, PepsiCo plans to introduce a prebiotic cola under its flagship soda brand.
The new product, Pepsi Prebiotic Cola, is expected to hit the market this fall. This development comes shortly after Pepsi acquired Poppi, a rising star in the prebiotic soda space, for $1.95 billion in May.
Many longtime independent bottlers told The Wall Street Journal earlier this year that they have never seen a worse period for the Pepsi brand.
Some observers suggest PepsiCo could take cues from Coca-Cola’s 2017 refranchising initiative, which shifted bottling operations back to local owners, allowing the company to concentrate on marketing and innovation.
Most recently, Celsius Holdings, Inc. (NASDAQ:CELH) announced an agreement with PepsiCo to oversee its flagship CELSIUS line, Alani Nu, and Rockstar Energy in the U.S. and Canada, while PepsiCo expands its investment and distribution reach.
Elliott’s sizable position has renewed speculation about whether PepsiCo’s beverage division, which accounted for roughly 40% of revenue in 2024, would perform better as a standalone business.
Activist investor Nelson Peltz’s Trian Fund Management made a similar case a decade ago, unsuccessfully pushing for a beverage spinout and a merger with Mondelez.
PepsiCo reported better-than-expected second-quarter adjusted earnings of $2.12 per share and revenue rising 1% to $22.73 billion.
It raised its full-year 2025 adjusted EPS guidance from $7.92 to $8.04, exceeding the Street estimate of $7.88.
Price Action: PEP stock is trading higher by 5.25% to $156.46 premarket at last check Tuesday.
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