Get ready to say goodbye to some of your favorite snacks and drinks, because PepsiCo is about to pull the plug on nearly 20% of its product lineup in a dramatic restructuring effort. Facing significant struggles with sales and an urgent need to tighten its massive budget, the global food and beverage giant is preparing for a painful reduction in variety. This unprecedented move to streamline operations is only the beginning, however, as the severe cost-cutting measures outlined by the company strongly hint at a looming crisis that could soon see mass layoffs ripple through the organization.
PepsiCo trims portfolio and accelerates automation
PepsiCo has faced mounting challenges in North America, where shoppers are leaning toward healthier, better-value choices. Growth has slowed, margins have tightened across its food lineup, and beverage market share continues to erode. In fact, as noted by Beverage Digest, Pepsi Cola has slipped to fourth place behind Coke, Dr Pepper, and Sprite, in terms of market share.
In response to these challenges, PepsiCo is making a major overhaul of its portfolio, cutting back nearly 20% of the products it sells as part of a sweeping cost-reduction effort. The food and beverage company says the strategy, which includes making its items more affordable, is designed to reignite organic revenue growth and strengthen its operating margins.
PepsiCo will also fast-track automation and digital upgrades, aiming to deliver “a record year of productivity savings in 2026.” “We feel encouraged about the actions and initiatives we are implementing with urgency to improve both marketplace and financial performance,” said Ramon Laguarta, chairman and CEO of PepsiCo.
PepsiCo bets big on better-for-you products
PepsiCo may be tightening its portfolio, but the company is doubling down on better-for-you innovations in an effort to capture consumers increasingly drawn to healthier choices. As part of its evolving strategy, the New York-based snack and beverage giant has been steadily adding more health-minded products to its lineup. Recent additions include new versions of Cheetos and Doritos made without artificial dyes, as well as plans to broaden its range of snacks featuring higher protein, added fiber, and whole grains. The company is also tapping into the growing functional beverage trend with the launch of a prebiotic edition of its signature cola.
Job cuts could be on the horizon for PepsiCo’s operations
According to Bloomberg, PepsiCo may soon announce layoffs in North America, possibly as early as this week. If confirmed, these cuts would be the latest step in PepsiCo’s broader push to reduce expenses and scale back operations. Just last month, the manufacturing giant closed two Frito-Lay plants in Orlando, Florida, cutting 500 jobs in the process.
Activist investor backs PepsiCo’s bold cost-cutting plan
PepsiCo has been working closely with activist investor Elliott Investment Management, which holds a $4 billion stake and has advocated for strategic changes at the beverage and snack giant. In a statement supporting PepsiCo’s recent moves, Elliott confirmed its backing of the company’s productivity initiatives. “We believe the plan announced today to invest in affordability, accelerate innovation, and aggressively reduce costs will drive greater revenue and profit growth,” said Marc Steinberg, a partner at Elliott.
With all the changes in place, PepsiCo projects 2% to 4% organic revenue growth for fiscal 2026 and expects to reach the higher end of that range in the second half of the year.
Source: Food Dive