PepsiCo’s decision to cut its U.S. workforce and streamline its product lineup marks one of the most aggressive corporate resets in years for the maker of Pepsi, Mountain Dew, Doritos and dozens of household consumer brands. The moves come as the company formalizes an early agreement with activist investor Elliott Investment Management, which built a $4 billion stake this year and pushed for sweeping changes to revive growth and simplify operations. The company now faces the dual challenge of delivering measurable financial improvement while managing internal disruption and preserving brand equity across its vast portfolio.

The updated strategy arrives after a year in which PepsiCo significantly lagged the broader equity market, with shares down more than 4% against a 16% gain in the S&P 500. That underperformance set the stage for heightened investor scrutiny and opened the door for activist intervention. Elliott’s pressure has accelerated the company’s urgency around cost discipline, operating efficiency and reinvestment tied directly to volume recovery.

A Leaner Portfolio and Lower Pricing as Growth Catalysts

Under the agreement with Elliott, PepsiCo will shrink its U.S. product offerings by 20%, targeting complexity in its sprawling assortment while freeing up resources for strategic brands. CEO Ramon Laguarta and CFO Steve Schmitt emphasized that the portfolio reductions are designed to simplify operations and channel efficiency savings into price reductions across key products. PepsiCo has already tested lower pricing across select brands and reported promising elasticity responses, giving management confidence that volume gains will follow.

The company also reaffirmed its commitment to reformulating products for healthier profiles, including lines with more protein, fiber, and reduced or removed artificial ingredients. These initiatives predate Elliott’s involvement but now carry renewed urgency as the company works to reposition for long-term competitiveness in both beverages and snacks.

For fiscal 2026, PepsiCo projected organic revenue growth of 2% to 4%, a range slightly above current analyst expectations. While the target reflects cautious optimism, investor reaction remained muted as Wall Street monitors whether operational changes can translate into a sustainable rebound.

Workforce Reductions Signal a Deeper Strategic Pivot

PepsiCo’s quiet instruction for employees in several U.S. offices to work remotely—followed by confirmation of impending layoffs—underscored the seriousness of the structural changes ahead. The company has already begun shutting facilities, including closing a Frito-Lay plant in Orlando that resulted in more than 450 job losses.

Management described the upcoming workforce reductions as part of a broader modernization effort to increase productivity and update manufacturing capabilities. These changes also reflect longstanding internal discussions around “right-sizing,” but Elliott’s involvement accelerated the timeline and likely raised expectations for faster execution.

PepsiCo’s hybrid system of company-owned and independent bottlers was another area flagged by Elliott for review. While Laguarta ruled out full refranchising of North American beverages, he acknowledged the need for a more integrated and regionally tailored model, suggesting a gradual evolution rather than a radical structural overhaul.

Balancing Investor Demands with Long-Term Strategy

Elliott did not secure a board seat as part of the agreement, though it praised PepsiCo’s willingness to refresh its board and accelerate strategic initiatives. The installation of former Walmart executive Steve Schmitt as CFO is widely seen as part of that refresh, signaling tighter financial discipline ahead.

As PepsiCo pares down its assortment and restructures its workforce, the company must strike a careful balance: delivering the near-term cost efficiencies that activists seek while continuing to invest in innovation, pricing competitiveness and manufacturing upgrades. With consumer trends shifting toward health-conscious products and private-label competition intensifying, execution risk remains high.

Still, the early alignment with Elliott offers PepsiCo a window to stabilize investor sentiment—provided it can translate simplification and reinvestment into higher volumes and improved profitability in 2026 and beyond.