Will Pepsi's Product Pivot, Price Cuts, and SKU Slashing Improve its Momentum?

While PepsiCo appears to be making all of the right moves as of late, according to a Dec. 11 Zacks analysis highlighting its stock price growth -- largely attributed to health net revenue growth, momentum in domestic and international markets, and operational improvements -- the CPG giant has formed a plan to double down on its recent efforts.

According to a recent report from Modern Retail's Gabriela Barkho, Pepsi is slated to slash prices across its assortment, and cut down about 20% of its existing SKUs, as part of an agreement reached with activist investor Elliott Investment Management.

“Today, 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, in a statement.

“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," Laguarta added.

Pepsi Outlines the Three Pillars of its Strategic Plan for 2026 and Beyond

Among the notable line items zeroed in on by the press release:

• The implementation of sharper everyday value via a renewed focus on targeted price tiers across brands and channels. This strategy hopes to ignite growth and improve the purchase frequency of Pepsi's most popular brands.
• Pushing its innovation agenda, with particular focus on the provision of simpler ingredients, the removal of artificial flavors and colors, and an improved inventory of products hinging around increased protein, fiber, and whole grains. The restaging of Lays and Tostitos, the introduction of Simply NKD Cheetos and Doritos, and the upcoming launch of Doritos Protein were all cited as examples.
• Improving operational excellence and aggressively reducing operating costs, using the savings to reinvest in advertising, marketing, and consumer value. The press release noted the shuttering of three manufacturing plants, the closure of several manufacturing lines, and the ongoing process of slashing total U.S. SKUs by 20% by early 2026.

"These moves signal that the weeks-long discussions between PepsiCo and Elliott will likely come to an end soon. Elliott disclosed in September that it had taken a $4 billion stake in PepsiCo, and it pushed for the CPG giant to make a number of changes, citing 'strained focus and execution,'" Barkho detailed, also noting that several analysts had told Modern Retail that "they expect more food and beverage companies to revisit pricing and undergo strategic resets in 2026 and beyond."

Barkho then cited Amber Brooner, CRO at revenue management platform XTEL, which works with companies -- including Danone, Kraft Heinz, and Nestle -- on pricing strategy.

Brooner referred to PepsiCo's plan as more of a broad strategic reset as opposed to a basic rollback of its past increases, underscoring the fact that today's shoppers' elasticity and retailers' pushback had become more apparent following years of significant inflation-driven pricing.

“Companies are revisiting price investment now because sustained price increases have begun to erode unit volumes,” she said, especially given the now-obvious trend of shoppers trading down to private-label and value-oriented offerings.