PepsiCo Inc. (NASDAQ:PEP) announced a set of operational changes backed by activist investor Elliott Investment Management on Monday, including a supply chain review and a streamlined product lineup.
PepsiCo To Cut 20% Lineup
The changes, which involve removing nearly 20% of its U.S. product lineup, are expected to “accelerate organic revenue growth, deliver record productivity savings and improve core operating margin – starting in 2026,” said PepsiCo’s CEO Ramon Laguarta.
PepsiCo is also ramping up its innovation strategy by rolling out cleaner-label products with simpler ingredients, no artificial colors or flavors, and added nutritional benefits like protein, fiber, and whole grains. This includes new Simply NKD Cheetos and Doritos, refreshed Lay's and Tostitos, and the upcoming 2026 launch of Doritos Protein.
The changes follow Elliott’s September disclosure of an approximately $4 billion stake in PepsiCo, advocating for adjustments in response to the company's overly complex brand portfolio and a shrinking beverage market share.
Marc Steinberg, a partner at Elliott, said the new plan focuses on affordability and accelerating innovation would aggressively cut costs was is expected to drive stronger revenue and profit growth.
Separately, the company is also planning job cuts in North America, according to a Bloomberg report. PepsiCo did not immediately respond to Benzinga‘s request for comment.
Strong Q3 Amid Key Challenges
Despite weaker volumes, PepsiCo's robust cost management enabled earnings of $2.29 per share in the third quarter, surpassing Street expectations of $2.26. The revenue for the quarter came in at $23.94 billion, slightly above the consensus of $23.85 billion.
The company projects organic revenue growth of 2–4% for fiscal 2026, excluding factors like acquisitions and currency fluctuations, versus analysts' average estimate of around 2.7%.
PepsiCo has been facing challenges, including a subdued consumption trend and a halt in Frito-Lay production in Rancho Cucamonga, California, after more than 50 years of operation in June. The company’s stock has also seen a decline in the past year, raising concerns among shareholders.
Benzinga's Edge Rankings place Pepsico in the 43rd percentile for growth and the 23rd percentile for value, reflecting its strong performance in both areas. Check the detailed report here.
Price Target: On a year-to-date basis, Pepsico stock fell 3.05% as per data from Benzinga Pro. On Monday, it edged 0.42% to close at $145.63.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
