PepsiCo is reducing the number of products it sells by nearly 20% as part of an expansive cost-cutting review in response to a slowdown in consumer spending and pressure from an activist investor.
The Doritos and Mountain Dew manufacturer said the moves, which include steps to make its products more affordable for consumers, will help accelerate organic revenue growth and improve operating margin expansion. PepsiCo also plans to accelerate automation and digitization initiatives, saying it aims to deliver "a record year of productivity savings in 2026."
"We feel encouraged about the actions and initiatives we are implementing with urgency to improve both marketplace and financial performance," said Ramon Laguarta, Chairman and CEO of PepsiCo.
PepsiCo has struggled in North America as consumers demand healthier products and seek out offerings with more value. The company has seen decelerating growth and slipping margins in food and “persistent” share loss and margin erosion in beverages, with Pepsi Cola falling to fourth place behind Coke, Dr Pepper and Sprite, according to Beverage Digest data.
In recent months, the New York-based company has taken steps to cut costs and overhaul its portfolio with more better-for-you offerings. PepsiCo has announced versions of Cheetos and Doritos without artificial dyes and plans to expand snack options with more protein, fiber and whole grains. It has also rolled out a prebiotic version of its namesake cola.
PepsiCo reportedly is planning to announce layoffs in North America, which could come as early as this week, according to Bloomberg. A PepsiCo spokesperson did not respond to Food Dive’s request for comment.
If the job cuts do take place, it would be the latest step by the CPG giant to cut costs and downsize operations. PepsiCo announced last month that it is closing a pair of Frito-Lay facilities in Orlando, Florida, and terminating 500 positions.
PepsiCo has been engaged in talks with activist Elliott Investment Management, which has built a $4 billion stake and pushed for changes at the food and beverage manufacturer. In PepsiCo’s statement announcing the changes, Elliott said it backed the productivity measures.
“We believe the plan announced today to invest in affordability, accelerate innovation and aggressively reduce costs will drive greater revenue and profit growth,” said Marc Steinberg, a partner at Elliott.
PepsiCo said it forecast organic revenue growth of 2% to 4% in fiscal 2026 and expects to deliver at the high end of that range during the second half of the year.
Robert Moskow, an analyst with TD Cowen, said in a note to investors that Elliott's involvement “created a greater sense of urgency for the company to execute its strategy,” but noted that PepsiCo's growth plans have not changed "to a revolutionary degree.”
