Elliott pressed PepsiCo to simplify its drinks portfolio by selling some brands, potentially including sparkling water maker SodaStream and Starry, a lemon-lime soda. (Gabby Jones/Bloomberg)
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Key Takeaways:
- PepsiCo plans to review its North American supply chain and warned employees of forthcoming structural changes as it nears a strategic announcement tied to talks with Elliott Investment Management.
- The company asked many staff to work from home, a move often preceding layoffs, while Elliott presses for portfolio simplification and divestitures after taking a $4 billion stake.
- PepsiCo is expected to outline product, packaging and capital allocation shifts next, with cost-cutting and potential workforce reductions advancing alongside its negotiations with Elliott.
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PepsiCo Inc. plans to review its North American supply chain as the soft drink and snack maker looks to wrap up negotiations with activist Elliott Investment Management, people familiar with the matter said. The company also warned workers of incoming “structural changes” and asked many to work from home.
An announcement on strategic moves could come as early as this week, the people said, asking not to be identified because the details haven’t been finalized.
Separately, PepsiCo instructed employees in a number of North America offices, including its headquarters in Purchase, N.Y., as well as Chicago and Plano, Texas, to work remotely this week. Companies have frequently requested staff to work from home in recent years ahead of layoffs.
“We will be making structural changes to our business that will affect some roles in the company,” Chief People Officer Jennifer Wells said in a Dec. 7 message to workers that was viewed by Bloomberg News.
Elliott, which announced a roughly $4 billion stake in PepsiCo in September, pushed the food and beverage company for changes, citing an overly complex portfolio of brands and a declining share of the beverage business. The activist is supportive of the changes being planned by PepsiCo, the people said.
PepsiCo is expected to emphasize efforts to develop new products and ways for pricing and packaging them, as well as changes to capital allocation, according to the people. PepsiCo isn’t expected to make any board changes, they said.
A representative for PepsiCo declined to comment. A spokesperson for Elliott couldn’t immediately be reached for comment.
PepsiCo CEO Ramon Laguarta has said the company is taking actions to reduce costs, improve productivity and update its manufacturing system so that it can invest in other aspects of the business. PepsiCo executives had already talked about “rightsizing the workforce” — a frequent corporate euphemism for layoffs — before Elliott’s engagement with the company.
In November, PepsiCo shut down two Frito-Lay facilities in Orlando, Fla., laying off more than 450 people. At the time, the company said the layoffs were “driven by business needs.”
Shares in PepsiCo have fallen roughly 5% this year through last week’s close, giving the company a market value approaching $200 billion. The company ranks No. 2 on the Transport Topics Top 100 list of the largest private carriers in North America. It ranked No. 1 on that list for 14 years before being taken over by Walmart in 2024.
Elliott pressed PepsiCo to simplify its drinks portfolio by selling some brands, potentially including sparkling water maker SodaStream and Starry, a lemon-lime soda.
PepsiCo utilizes a network of independent bottlers, but also operates many company-owned bottling businesses, which some investors would like to see it shed.
Elliott also urged PepsiCo to streamline its snacks portfolio and focus on its best-selling salty snacks. Elliott flagged some cereals, including Life and Cap’n Crunch, as well as Quaker Oats and Rice-A-Roni, as brands PepsiCo might want to divest.
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.
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