PepsiCo to Cut 20% of U.S. Products and Announce Layoffs
PepsiCo Inc. has announced one of its most aggressive restructuring plans in years, encompassing significant job cuts, the closure of manufacturing lines, and the elimination of nearly one-fifth of its U.S. product portfolio.
This wide-ranging overhaul comes after weeks of intense, yet collaborative, discussions with activist shareholder Elliott Investment Management, which has been pushing the consumer giant to streamline operations and revitalize growth.
Elliott, which disclosed a $4 billion stake in September, argued that PepsiCo’s sprawling portfolio had become overly complex, hindering performance and contributing to the company underperforming rival Coca-Cola over the past five years.
While PepsiCo CEO Ramon Laguarta previously described interactions with Elliott as constructive, the newly announced plan represents a significant accommodation to the activist fund’s pressure for bolder strategic action.
Aggressive Product Line Reduction and Simplification
The core of the restructuring focuses on simplifying PepsiCo’s massive product architecture.
The company plans to cut approximately 20% of its U.S. product offerings (SKUs) by early next year.
The reduction will streamline the supply chain and focus resources on the fastest-growing and most profitable brands in the beverage and snack categories.
This simplification is paired with a strategic shift towards affordability and clearer ingredients.
PepsiCo is accelerating the introduction of offerings with simpler, more functional ingredients, citing examples such as the restaging of Lay’s and Tostitos, and the development of new products like Doritos Protein and Simply NKD Cheetos and Doritos, which remove artificial colors and flavors.
The company will reinvest the savings generated from these efficiency moves in advertising, marketing, and offering better value to consumers through more affordable price tiers.
PepsiCo Job Cuts and Supply Chain Review
As part of its move to “aggressively reduce costs,” PepsiCo has initiated a major review of its North America supply chain, which will result in structural changes affecting roles in the United States and Canada.
Layoffs are expected across multiple corporate and operational offices, including key locations like Purchase, New York; Chicago; and Plano, Texas.
The company had already signaled operational consolidation with recent closures of Frito-Lay facilities and four bottling plants across the U.S. in late 2024, citing a need for a more agile and optimized manufacturing network.
PepsiCo’s internal communication confirmed forthcoming staff reductions, stating that “structural changes to our business that will affect some roles in the company” were imminent.
Alongside job cuts, the company plans to shut down several manufacturing lines and ramp up investment in automation and digitization to further enhance operational excellence.
Financial Targets and Activist Engagement
PepsiCo designed the strategic initiative to deliver at least 100 basis points of core operating margin expansion over the next three fiscal years.
PepsiCo has also provided a preliminary financial outlook, projecting organic revenue growth of 2% to 4% for fiscal 2026.
Elliott initially pushed for a potential spin-off or refranchising of the vast North American bottling network, an issue the company has yet to fully commit to.
Regardless, the activist investor expressed strong confidence in the announced plan.
Marc Steinberg, a partner at Elliott, stated that the firm appreciates the “collaborative engagement” and believes the aggressive cost reduction and innovation strategy will create “substantial value for shareholders.”
Crucially, the lack of board seats for Elliott and no planned proxy contest signal a negotiated truce between the company and the major investor.
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