PepsiCo is preparing to shrink its North American workforce and streamline its product range as part of a sweeping cost-cutting plan prompted by pressure from activist investor Elliott Investment Management.
The company said it has begun a review of its regional supply chain and will pursue “aggressive” savings to support growth, after weeks of discussions with Elliott. The Wall Street firm disclosed a $4 billion stake in PepsiCo in September and has pushed for measures including refranchising or spinning off the bottling business, as well as divesting non-core food assets, Reuters reported.
PepsiCo has trailed Coca-Cola in recent years as consumers shift towards healthier snacks and drinks, while inflation has driven shoppers to smaller pack sizes. Against that backdrop, the company plans structural changes that will affect some roles in the United States and Canada.
A central component of the plan is a sharper focus on affordability and simpler ingredients. PepsiCo intends to cut nearly 20% of its U.S. product lines by early next year and close several manufacturing lines to drive efficiencies. The company said it was “carefully evaluating an integrated model,” weighing returns, scale and state-level market share, and aims to provide a fuller update on the supply chain review in late 2026.
Elliott will not receive board seats and no proxy contest is planned, a source familiar with the matter told Reuters. Marc Steinberg, a partner at Elliott, said the firm was confident PepsiCo would “create substantial value for shareholders” as it executes the overhaul.
Alongside the cuts, PepsiCo said it will accelerate automation and digitisation across production. The initiative is expected to deliver at least 100 basis points of core operating margin expansion over the next three fiscal years.
In October, CEO Ramon Laguarta described the company’s exchanges with Elliott as collaborative but did not commit to the investor’s call for a spin-off of PepsiCo’s large North American bottling network, a move advocates say could boost margins.
The months ahead will test whether PepsiCo’s combination of portfolio simplification, technology investment and supply chain restructuring can restore momentum in a market increasingly defined by value-conscious and health-focused consumers.