PepsiCo Faces Calls to Revamp Portfolio to Boost Growth and Investment

PepsiCo should review its portfolio to boost growth, according to activist investor Elliott Investment Management. The company is at a critical inflection point and should become a more focused, streamlined business. Elliott recommends refranchising its drinks bottling network and reviewing its beverage portfolio in North America to make it less complex. The group's PepsiCo Beverages North America division has underperformed its peers for over a decade, while its PepsiCo Foods North America division has faced challenges due to a challenging consumer backdrop and increased investment spending. Elliott urges PepsiCo to better align PFNA's costs with the present volume reality and streamline its portfolio by offloading non-core and underperforming assets.

PepsiCo Inc. (PEP) is under scrutiny from activist investor Elliott Investment Management, which holds a $4 billion stake in the company. Elliott has urged PepsiCo to review its portfolio and streamline its operations to boost growth, stating that the company is at a critical inflection point [1].

Elliott's letter, sent to PepsiCo's board on September 2, 2025, highlights the underperformance of PepsiCo Beverages North America (PBNA), which has lagged its peers for over a decade on both growth and margins. The division's strategic missteps, including self-inflicted share losses in the soda market and the introduction of new brands and SKUs, have strained focus and execution [2].

The activist investor recommends refranchising PepsiCo's drinks bottling network in North America and reviewing its beverage portfolio to make the business less complex. Elliott also suggests that PepsiCo should better align the costs of PepsiCo Foods North America (PFNA) with the present volume reality and streamline its portfolio by offloading non-core and underperforming assets [1].

PepsiCo's shares have been volatile, with a 2.44% increase on September 2, 2025, following the release of Elliott's letter. The company's stock has lost about a quarter of its value since hitting a record high in May 2023 [2].

PepsiCo has been facing challenges in the North America market, with both its beverages and foods divisions reporting poor financial results. The company's net revenue in 2024 was $91.85 billion, up 0.4% year-over-year, but its operating profit grew by only 7.5% to $12.89 billion. Net income increased by 5.3% to $9.58 billion [1].

Elliott's letter emphasizes the need for PepsiCo to focus on its core franchises in carbonated soft drinks, while selectively expanding in growing categories. The company should also consider the potential re-franchising of its bottling network along the lines of rival Coca-Cola [2].

PepsiCo has been working on integrating its businesses in North America to improve productivity. Chairman and CEO Ramon Laguarta stated that the company has two large businesses, almost $30 billion each, that have been operating side by side. With the investments made in technology and data, PepsiCo is looking to start looking at those businesses in a more integrated way to perform some of the value chain tasks in an integrated way [1].

Elliott has expressed its desire to collaborate with PepsiCo's board and management to improve the company's performance. The activist investor believes that with the right mindset and an appropriately ambitious turnaround plan, PepsiCo can revitalize its business and unlock significant shareholder value [3].

References:
[1] https://www.just-food.com/news/pepsico-must-review-portfolio-to-boost-growth-investment-fund-elliott-says/
[2] https://www.reuters.com/sustainability/sustainable-finance-reporting/elliott-calls-turnaround-pepsico-with-4-billion-stake-2025-09-02/
[3] https://www.prnewswire.com/news-releases/elliott-sends-presentation-to-board-of-directors-of-pepsico-inc-302543745.html