PepsiCo is preparing for a significant transformation in its North American operations as it announces large-scale workforce reductions and a major simplification of its product portfolio. The sweeping changes come in response to growing pressure from activist investor Elliott Investment Management, which disclosed a $4 billion stake in the global food and beverage giant earlier this year.
Following Elliott’s investment in September, PepsiCo initiated a comprehensive review of its regional supply chain, aiming to identify new efficiencies and unlock long-term value. The company has pledged to deliver “aggressive” cost savings as part of its broader strategy to reignite growth in a challenging consumer environment. Reports suggest that Elliott has urged PepsiCo to explore options such as refranchising or separating its bottling operations and divesting non-core food brands that fall outside its central beverage and snack categories.
PepsiCo’s Competitive Challenges
For years, PepsiCo has faced intensifying competition from its biggest rival, Coca-Cola. Shifting consumer preferences toward healthier, low-sugar beverages and smaller, more affordable packaging options have further complicated the company’s growth strategy. Inflationary pressures have also changed shopping behavior, prompting consumers to prioritize value and health-conscious products.
To adapt, PepsiCo is launching a series of structural changes that will reshape its U.S. and Canadian operations. The company aims to streamline its portfolio, reduce supply chain inefficiencies, and enhance profitability through automation and digital transformation.
Simplifying Product Portfolio and Operations
A central element of PepsiCo’s reset is simplifying its product lineup. The company plans to eliminate nearly 20% of its U.S. product SKUs by early next year. This move is designed to reduce operational complexity, minimize waste, and improve the speed and flexibility of production. Additionally, PepsiCo will shut down several manufacturing lines across North America to optimize plant utilization and lower production costs.
According to company sources, the restructuring will support a more “integrated model” that balances market share growth, regional performance, and return on investment. This model will allow PepsiCo to focus more intently on its strongest-performing categories and streamline underperforming assets. A detailed strategic update is expected in late 2026, outlining how the company plans to sustain its new operational efficiencies over time.
Automation and Digital Acceleration
As part of its transformation plan, PepsiCo will increase its investment in automation and digital technologies. Advanced manufacturing systems, AI-driven analytics, and data-enabled logistics will play a vital role in improving production efficiency and forecasting accuracy. The company expects these digital initiatives to enhance its core operating margins by at least 100 basis points over the next three fiscal years.
This renewed focus on technology underscores PepsiCo’s ambition to remain competitive in a market increasingly defined by innovation, consumer personalization, and cost efficiency.
Elliott’s Role and Shareholder Outlook
While Elliott Investment Management has taken an active interest in PepsiCo’s turnaround, the firm does not plan to take board seats or initiate a proxy battle. According to Reuters sources, Elliott expressed confidence in the company’s strategic direction, stating that PepsiCo’s restructuring and operational reset could “unlock substantial shareholder value.”
The partnership signals a shift in how large consumer goods companies are adapting to activist investor influence, emphasizing collaboration over confrontation.
Looking Ahead
PepsiCo’s cost-cutting overhaul and portfolio simplification come at a critical time for the company. With consumers demanding healthier, affordable, and more sustainable options, the success of these initiatives will depend on PepsiCo’s ability to balance innovation with operational efficiency.
Industry analysts suggest that while automation and cost reductions may strengthen margins, sustained growth will require ongoing product innovation and a sharper focus on consumer wellness trends. Whether this mix of portfolio pruning, digital transformation, and supply chain redesign will help PepsiCo regain its competitive momentum remains to be seen.
Still, PepsiCo’s willingness to embrace change—combined with investor confidence and a clear strategic roadmap—positions the company for a potentially stronger and more agile future.