PepsiCo Plans Layoffs As It Looks To Wrap Up Elliott Talks

PepsiCo Inc. reached an agreement with activist investor Elliott Investment Management that includes a 20% reduction in its US product lineup and a sharper focus on affordability, while the soda and snacks company also plans layoffs as part of cost reduction efforts.

The moves represent an early agreement with Elliott as the maker of Mountain Dew and Doritos seeks to recapture growth and win back investors. Elliott built up a roughly $4 billion stake earlier this year and clamored for changes, citing an overly complex portfolio of brands and a declining share of the beverage business. 

PepsiCo shares were little changed in extended trading. The stock has dropped 4.2% so far this year through Monday’s close, compared with a gain of 16% for the S&P 500 Index. 

Marc Steinberg, a partner at Elliott, said the plan “will drive greater revenue and profit growth,” according to PepsiCo’s statement. Elliott will continue to engage with PepsiCo, he added. 

The company also offered an updated outlook for next year, projecting organic revenue growth of 2% to 4% in fiscal 2026, versus an average analyst estimate of nearly 2.7%. Organic growth, a key measure for investors, excludes items such as acquisitions and currency volatility. 

Separately, PepsiCo instructed employees in a number of North American offices, including its headquarters in Purchase, New York, as well as Chicago and Plano, Texas, to work remotely this week. Companies in recent years have frequently requested staff to work from home ahead of layoff announcements. 

“We will be making structural changes to our business that will affect some roles in the company,” Jennifer Wells, chief people officer in North America, said in a message to workers on Sunday that was viewed by Bloomberg News. 

PepsiCo Chief Executive Officer Ramon Laguarta has said the company is taking actions to reduce costs, improve productivity and update its manufacturing so that it can invest in other aspects of the business. PepsiCo executives had already talked about “right-sizing the workforce” — a frequent corporate euphemism for layoffs — prior to Elliott’s engagement with the company. 

In November, PepsiCo said it would shut down Frito-Lay facilities in Orlando, Florida, laying off more than 450 people. At the time, the company said the layoffs were “driven by business needs.” 

PepsiCo didn’t specify which products it will stop selling. Elliott has pressed the company to simplify its drinks portfolio by selling some brands, potentially including sparkling water maker SodaStream and Starry, a lemon-lime soda. 

It has also urged PepsiCo to focus on its best-selling salty snacks and had flagged some cereals, including Life and Cap’n Crunch, as well as Quaker Oats and Rice-A-Roni, as brands the company might want to divest.

The agreement didn’t give Elliott a seat on PepsiCo’s board, but Steinberg said Elliott welcomed PepsiCo’s “commitment to board refreshment.” In November, former Walmart Inc. executive Steve Schmitt joined PepsiCo as chief financial officer, replacing the retiring Jamie Caulfield. 

In the months since Elliott’s stake was announced, Laguarta has said the company was moving quickly to update its portfolio and cut costs. It overhauled Lay’s potato chips, including reformulating its barbecue flavors to swap out artificial dyes for natural ones. The company also unveiled a new line of Doritos and Cheetos that strip out all synthetic dyes and said it would be expanding its options with more protein and fiber.