The news: PepsiCo reached an agreement with activist investor Elliott Investment Management to cut its US SKU count by 20%, streamline its workforce, and reinvest the savings into lowering prices on key brands.

The deal avoids a potentially drawn-out battle between PepsiCo and Elliott, and it does not include Elliott representatives joining the board. Because many elements of PepsiCo’s strategy were already in motion before Elliott invested, the agreement largely reinforces the company’s existing plans, making it favorable for the CPG giant.

Alongside the announcement, the company said it expects full-year organic revenues to rise 2% to 4% next year, and it anticipates performing the high end of that range in the second half of 2026.

The details: CEO Ramon Laguarta said lower prices on core brands should help lift sales volumes. At the same time, PepsiCo’s plan to eliminate one-fifth of its SKUs will not prevent it from expanding its lineup of “better for you” products.

PepsiCo has put a big focus this year on goods made without artificial colors or flavors, formulated with fewer and simpler ingredients, and featuring more protein, fiber, and whole grains.

• That strategy is driving the redesign of Lay’s packaging to highlight that the chips are “made with real potatoes,” as well as the reformulation of products to remove seed and corn oils and artificial coloring.
• PepsiCo also recently rolled out its “Naked” platform, featuring classic snacks free of artificial colors or flavors, and it plans to launch more protein-enhanced versions of Doritos and Quaker products.
• Earlier this year, the company bought prebiotic soda company Poppi for $1.95 billion, unveiled a prebiotic version of Pepsi cola, and has been expanding its range of sugar-free beverages.

Our take: By cutting costs, lowering prices, and doubling down on innovation that aligns with consumer trends, PepsiCo is taking clear steps to steady and revive its business. But getting back on solid footing will take time. Heightened price sensitivity has pushed many shoppers toward cheaper private labels, and winning those customers back will be a challenge, even with more value-oriented pricing and a fresher product lineup.