PepsiCo plans to cut prices and eliminate some of its products under a deal with an activist investor announced Monday.
TL;DR
- PepsiCo will cut products by 20% and reduce prices to enhance consumer value and marketing.
- New product launches will focus on simpler, beneficial components like Doritos Protein and Simply NKD Cheetos.
- These changes are driven by activist investor Elliott Investment Management, which seeks improved profitability.
- PepsiCo aims to increase shareholder value through affordability, innovation, and aggressive cost reduction.
The company headquartered in Purchase, New York, responsible for Manufacturing Cheetos, Tostitos, and other Frito-Lay items along with drinks, announced plans to reduce its product selection by approximately 20% before the start of next year. PepsiCo stated that the funds saved would be allocated towards marketing initiatives and enhancing consumer value. The company did not specify which items would be discontinued or the extent of any price reductions.
PepsiCo announced its intention to speed up the launch of novel products featuring less complex and more beneficial components, such as Doritos Protein and Simply NKD Cheetos and Doritos, which are free from synthetic flavorings or hues. Furthermore, the corporation recently unveiled a prebiotic iteration of its iconic soda.
Following encouragement from Elliott Investment Management, which acquired a $4 billion interest in the firm last September, PepsiCo is implementing these adjustments. Elliott communicated to PepsiCo’s board in a letter that the company's strategic direction is unclear, its growth is slowing, and its North American food and beverage operations are experiencing declining profitability.
In a shared declaration alongside PepsiCo on Monday, Elliott Partner Marc Steinberg expressed the firm's assurance that PepsiCo possesses the capability to generate shareholder value through its implementation of a new strategy.
“We appreciate our collaborative engagement with PepsiCo’s management team and the urgency they have demonstrated,” Steinberg said. “We believe the plan announced today to invest in affordability, accelerate innovation and aggressively reduce costs will drive greater revenue and profit growth.”
Elliott said it plans to continue working closely with the company.
PepsiCo shares were flat in after-hours trading Monday.
PepsiCo projects its organic revenue will increase by 2% to 4% in 2026. For the initial nine months of the current year, the company's organic revenue saw a rise of 1.5%.
PepsiCo additionally stated its intention to examine its supply chain and proceed with adjustments to its board, prioritizing international executives capable of assisting in achieving its objectives for expansion and financial success.
“We feel encouraged about the actions and initiatives we are implementing with urgency to improve both marketplace and financial performance,” PepsiCo Chairman and CEO Ramon Laguarta said in a statement.
PepsiCo indicated in February that a prolonged period of significant price hikes and evolving consumer tastes have diminished the appeal of its beverages and snack items. In July, the corporation stated it was endeavoring to counter the notion that its offerings are excessively priced through broader availability of more affordable brands such as Chester’s and Santitas.
