PepsiCo has promised to slash 20% of its North American foods business’ SKUs, “aggressively” reduce operating costs and “carefully evaluate” the refranchisement of its US bottling in concessions to activist investor Elliott Management.
Both PepsiCo and Elliott hailed the “constructive engagement” in their dealings, with CEO Ramon Laguarta highlighting the struggling PepsiCo Foods North America (PFNA) as a core area of progress against demands made by Elliott in its shock September intervention.
With new CFO Steve Schmitt – the former Walmart finance chief and a rare external appointment to the group – now in position, PepsiCo has outlined a programme of action for 2026. It has dropped all reference to its One North America strategy, by which it had intended to integrate PFNA with domestic drinks business, PepsiCo Beverages North America (PBNA).
The fmcg giant also bowed to Elliott’s demands to consider refranchising of its in-house bottling network, saying it was “carefully evaluating” the merits of contracting out bottling on a US state-by-state basis. The company promised an update for investors in “late 2026”. Elliott has argued PepsiCo will find better profitability following in Coca-Cola’s footsteps and refranchising its in-house US bottling operations. PepsiCo brands are bottled by Carlsberg Britvic in the UK.
Read more: Can activist shareholder plan turn around PepsiCo?
“We appreciate our collaborative engagement with PepsiCo’s management team and the urgency they have demonstrated,” said Elliott partner Marc Steinberg.
“We believe the plan announced today to invest in affordability, accelerate innovation and aggressively reduce costs will drive greater revenue and profit growth.
”In addition, we welcome the comprehensive review of PepsiCo’s North America supply chain and go-to-market systems, as well as PepsiCo’s commitment to board refreshment. We are confident that PepsiCo will create substantial value for shareholders as it executes on this plan, and we look forward to continued engagement with the company.”
PFNA’s transformation will come earlier in the new year, with “permissible and functional” NPD at its core. PepsiCo said artificial colours and flavourings will be cut from recipes and protein, fibre and whole grains introduced across core brands.
Cheaper prices and significant marketing investment will likewise aim to revitalise a historically strong division beset by falling volumes – all to be paid for by sharp cuts to operating costs, including the closure of manufacturing plants and the cutting of 20% of the division’s SKU range.
PepsiCo has already closed three plants in FY2025, alongside several other manufacturing lines, and will aim for “a record year” of productivity savings in 2026 thanks to actions taken in H2 2025.
“PepsiCo Foods North America will play a critical role towards achieving these targets and we feel encouraged about the actions and initiatives we are implementing with urgency to improve both marketplace and financial performance,” Laguarta said.
PepsiCo now expects full-year organic revenue growth at PFNA of 2%-4%, with growth weighted towards the second half of the year, with the division’s earnings per share expected to rise around 5%-7% in FY2026.
“Customers have expressed enthusiasm and support for our commercial plans, and we expect in-store points of presence to increase during the first half of 2026,” read a company statement.
“Therefore, we expect PepsiCo Foods North America to deliver organic revenue growth and core operating margin expansion in fiscal 2026 with good progress being made towards these objectives.”
Elliott took a reported $4bn stake in PepsiCo in early September 2025, prompting the historically investor-wary supplier to engage immediately, with public cost-saving plans announced after the company published its Q3 results in October.
PepsiCo’s shares traded slightly down following its latest announcement, falling 1.4% to $144.21 early the next day. Stocks in the giant have bounced between $140 and $150 per share since August, with price moderately elevated since Elliott’s intervention. PepsiCo’s share price had hit a five-year low in summer 2025 after a sequence of poor financial results.
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