PepsiCo Embarks on Strategic Overhaul Amid Investor Pressure

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Facing pressure from activist investors, PepsiCo has unveiled a significant strategic shift aimed at revitalizing its business. The beverage and snack giant announced a dual-pronged approach involving a major product portfolio simplification and a strategic acquisition, signaling a clear response to calls for change.

In a move to capture growth in the functional beverage sector, PepsiCo has agreed to acquire Poppi, a leading maker of prebiotic sodas, for $1.95 billion. The transaction details include an upfront payment of $1.65 billion. Poppi has demonstrated remarkable growth, reporting $100 million in revenue for 2023—a figure that represents a tripling of its sales since 2020. The brand is a key player in the low-sugar, gut-health-friendly soda segment. PepsiCo plans to leverage its extensive distribution network to accelerate the smaller brand's scale and market reach.

Streamlining for Profitability

Concurrently, the company is initiating a sweeping rationalization of its product lineup, particularly in North America. The plan, set for completion by early 2026, will eliminate approximately one-fifth of its stock-keeping units (SKUs). This decision targets product variants deemed overly complex or insufficiently profitable, a direct outcome of scrutiny from activist investor Elliott Investment Management.

In a related effort to stimulate volume growth, PepsiCo is implementing price reductions on select items. The market's initial reaction has been favorable, with the company's shares appreciating roughly 3% over the past week.

Analyst Upgrades and Leadership Changes

Financial institutions have largely welcomed these strategic maneuvers. JPMorgan upgraded PepsiCo's rating from "Neutral" to "Overweight," setting a price target of $164. Similarly, analysts at Piper Sandler and UBS see potential for the stock to reach $172, citing the company's newfound decisiveness in driving innovation and operational productivity.

Supporting this strategic redirection, PepsiCo is also making changes to its executive leadership. Steven Williams, currently heading the North America business, is slated for promotion to Executive Vice President and Vice Chairman, effective late December 2025.

Valuation and Outlook

Despite these developments, PepsiCo's stock continues to trade below its historical valuation average and lags behind comparable quality equities. The combined strategy of portfolio optimization and strategic acquisition forms the cornerstone of a targeted turnaround for fiscal 2026. While the success of this plan will unfold over subsequent quarters, the company has decisively set its new strategic course.