PepsiCo Cuts Product Line and Announces Layoffs
On Tuesday, PepsiCo revealed plans to reduce its U.S. soda and snack offerings by 20%, change some prices, and lay off an undisclosed number of employees—a decision made in collaboration with activist investor Elliott Management.
The renowned snack lineup includes Lay’s, Cheetos, Doritos, and Funyuns, alongside popular drinks like Pepsi and Mountain Dew. However, the company hasn’t specified which brands will be discontinued.
This move follows Elliott’s significant investment in PepsiCo earlier this year, where it acquired a $4 billion stake, pushing the company to simplify its brand portfolio.
In light of Elliott’s influence, PepsiCo is addressing cost-cutting measures, with an internal message to staff indicating that structural changes will impact certain roles in the company. Recently, employees at various North American locations, including the headquarters in New York, were instructed to work from home.
On the production front, PepsiCo is revamping its Lay’s potato chips to highlight that they are made from “real potatoes” and has switched to natural colors for its barbecue flavors, replacing artificial ones.
Additionally, the company is reformulating its Doritos and Cheetos products by removing synthetic dyes after public pushback from Health Secretary Robert F. Kennedy Jr., who urged companies to cut back on artificial food dyes.
PepsiCo also plans to introduce new products that are higher in protein and fiber, alongside options with lowered sugar content.
“This isn’t business as usual for us,” said PepsiCo’s Chief Financial Officer Steve Schmidt during a conference call with analysts on Tuesday.
Looking ahead, the company anticipates organic revenue growth of 2% to 4% for fiscal 2026, slightly below the analysts’ expectations of approximately 2.7%.
CEO Ramon Laguarta mentioned that savings from efficiency improvements would help in lowering prices for some key brands, hoping to stimulate sales amid inflation pressures that led consumers to shy away from higher-priced snacks and beverages. The specific products to receive price reductions weren’t identified.
“We have a chance to reinvest value significantly,” Laguarta expressed, adding that he feels optimistic about potential sales volume increases.
In November, the company announced plans to shut down its Frito-Lay facility in Orlando, Florida, resulting in over 450 job losses, which they attributed to “business needs.”
Despite the ongoing changes, Laguarta reaffirmed that PepsiCo isn’t contemplating fully franchising its North American operations, although they are exploring various shifts within their existing system.
Similar to other beverage companies, PepsiCo operates through both independent bottlers and company-owned bottling facilities. Laguarta confirmed that Elliott would remain involved with the company.
