PepsiCo says it will reduce prices and eliminate about 20% of its products by early 2026 in a deal with an activist investor announced Dec. 8.
The company didn’t say which products or how much it would reduce prices.
“Today, we are announcing our plans and initiatives that aim to accelerate organic revenue growth, deliver record productivity savings and improve core operating margin—starting in 2026,” said Ramon Laguarta, chairman and CEO of Purchase, New York-based PepsiCo. “PepsiCo Foods North America will play a critical role toward achieving these targets and we feel encouraged about the actions and initiatives we are implementing with urgency to improve both marketplace and financial performance.”
The company is making the changes after being urged by West Palm Beach, Florida-based Elliott Investment Management, which took a $4 billion stake in the company in September, according to the Associated Press. Elliott, in a letter to PepsiCo’s board, said the company is being “hurt by a lack of strategic clarity, decelerating growth and eroding profitability in its North American food and beverage businesses,” according to AP.
“Accelerating organic revenue growth and improving core operating margin expansion are critical to enhancing long-term shareholder value,” PepsiCo said. “To achieve these objectives, we are acting with a high sense of urgency to improve the marketplace competitiveness and financial performance of PepsiCo Foods North America by:”
- Implementing sharper everyday value through a targeted approach on affordable price tiers by brand and channel, aimed at stimulating growth and improving the purchase frequency of our mainstream brands.
- Elevating an expansive innovation agenda, with permissible and functional offerings that remove artificial colors and flavors, provide simpler ingredients and include more protein, fiber and whole grains. This includes the recent introduction of Simply NKD Cheetos and Doritos, the restaging of Lay’s and Tostitos and the 2026 launch of Doritos Protein.
- Aggressively reducing operating costs and improving operational excellence with savings generated to support meaningful investments in advertising and marketing and consumer value. For example, we have closed three manufacturing plants and shut several manufacturing lines this year and are in the process of reducing nearly 20% of SKUs in the U.S. by early next year.
“We appreciate our collaborative engagement with PepsiCo’s management team and the urgency they have demonstrated,” said Marc Steinberg, a partner at Elliott. “We believe the plan announced today to invest in affordability, accelerate innovation and aggressively reduce costs will drive greater revenue and profit growth. In addition, we welcome the comprehensive review of PepsiCo’s North America supply chain and go-to-market systems, as well as PepsiCo’s commitment to Board refreshment. We are confident that PepsiCo will create substantial value for shareholders as it executes on this plan, and we look forward to continued engagement with the Company.”
PepsiCo products include Fritos, Doritos, Cracker Jack, Cheetos, Aquafina, Lipton, Lay’s and many more.
In February, the company said that “years of double-digit price increases and changing customer preferences have weakened demand for its drinks and snacks,” AP wrote. PepsiCo said in July it was trying to “combat perceptions that its products are too expensive by expanding distribution of value brands like Chester’s and Santitas,” according to AP.
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