PepsiCo said it is eliminating hundreds of products from shelves by early next year following discussions with an activist investor pushing the company to cut costs and streamline its product lineup.
On Monday, the food giant, whose brands include Fritos, Gatorade, Doritos, Cheetos and Aquafina, said it is in the process of reducing nearly 20% of the SKUs (stock keeping units) that it sells in the U.S. by early 2026. It has already closed three manufacturing plants and shut some manufacturing lines this year.
An SKU is a specific version of an item such as a different size, flavor or package type. However, it doesn’t mean an entire product line.
PepsiCo said it also plans to offer more affordable price options to stimulate growth and improve “the purchase frequency of our mainstream brands.” It is also focusing on rapidly launching products that meet the needs of the consumer, such as products made without artificial colors and flavors and that include more protein, fiber and whole grains.
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The company’s plans come in the midst of ongoing discussions with Elliott Investment Management, which disclosed a $4 billion stake in PepsiCo in September. Elliott wrote a letter to PepsiCo, pushing it to take several steps to reduce costs and revitalize the business, which it argued had been underperforming in recent years and trades near decade-low valuation levels. Its sales also lagged behind one of its biggest rivals: Coca-Cola.
In its letter, Elliott urged the company to consider selling or outsourcing its complex, costly bottling operations, which Coca-Cola already does. It also recommended that the company cut back on unnecessary drink variations to make the business easier and cheaper to run. For food, Elliott said PepsiCo needs to lower costs to match current sales levels and sell off parts of the business that aren’t essential or aren’t performing well.
The aim is that these measures will collectively help the company boost profits, streamline operations and free up money for reinvestment in the company’s strongest areas.
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“We appreciate our collaborative engagement with PepsiCo’s management team and the urgency they have demonstrated,” said Marc Steinberg, partner at Elliott.
Marc Steinberg, partner at Elliott, commended PepsiCo’s urgency in addressing its issues and believes that its plans to make products more affordable, accelerate the launch of new products and cut costs heavily will drive greater revenue and profit growth.
“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,” Steinberg said.
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PepsiCo CEO Ramon Laguarta also expressed confidence in its plans, which he believes will help them accelerate organic revenue growth, deliver record productivity savings and improve core operating margin starting in 2026.
The company said it expects sales from its core business to grow between 2% and 4% for all of 2026. The company anticipates to hit the higher end of that range in the second half of the year. The businesses PepsiCo bought or sold in 2025 are expected to add to that growth, the company added.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| PEP | PEPSICO INC. | 149.04 | +4.40 | +3.04% |
| KO | THE COCA-COLA CO. | 70.06 | -0.06 | -0.09% |
With the money saved and by running the business more efficiently, PepsiCo also expects its profit margins to grow by at least one percentage point total over the next three years.
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