The food and drink giant has revealed that it will be focused on “aggressively reducing operating costs” and “improving operational excellence.”
The savings generated will support “meaningful investments in advertising and marketing and consumer value”. It highlighted that it has already closed three manufacturing plants and shut several manufacturing lines this year and is in the process of reducing nearly 20% of its product lines in the US by early next year.
The move, according to reports, is in response to the views of its investor Elliott Investment Management.
“We are announcing our plans and initiatives that aim to accelerate organic revenue growth, deliver record productivity savings and improve core operating margin – starting in 2026,” said Ramon Laguarta, chairman and CEO of PepsiCo.
“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.”
Marc Steinberg, partner at Elliott, said that the company appreciated the collaborative engagement with PepsiCo’s management team and the urgency they have demonstrated.
“We believe the plan announced today to invest in affordability, accelerate innovation and aggressively reduce costs will drive greater revenue and profit growth,” said Steinberg.
“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.”
PepsiCo has also revealed it will be taking a targeted approach on affordable price tiers by brand and channel, aimed at stimulating growth and improving the purchase frequency.
There will also be a focus on innovation with more functional offerings removing artificial colourings and flavours, as well as a move towards more simpler ingredients including more protein, fibre and whole grains.
