Key takeaways:
- PepsiCo is cutting nearly 20% of its US SKUs and shutting plants to simplify operations, improve margins and refocus investment on higher-impact brands.
- The company is pivoting hard into functional snacking – protein, fibre and cleaner-label products – as it tries to stay relevant with more health-conscious consumers.
- Through acquisitions, new foodservice concepts and supply chain investments, PepsiCo is repositioning itself as a broader, more agile food business rather than just a traditional snacks-and-soda giant.
The recent headlines about PepsiCo’s snack ‘purge’ have grabbed attention, largely because people notice when familiar products disappear. But that’s only the visible edge of a much bigger shift.
Back in December, the Purchase, New York-headquartered company said it was on track to cut nearly a fifth of its US SKUs by early 2026, having already closed three manufacturing plants and shut multiple lines. That’s what happens when scale stops being an advantage.
PepsiCo may have lifted revenue to $93.9bn in 2025, but operating profit moved in the opposite direction, dropping to $11.5bn and dragging margins down with it. Growth is still there, but as experienced across much of the food industry, it’s thinner and harder won.
North America, in particular, hasn’t been pulling its weight. The snacks division saw both revenue and profit slip, while beverages took a heavier hit, weighed down by costs, softer demand and acquisition-related charges. That doesn’t point to crisis, but it does underline that momentum alone won’t carry the business.
Pressure came to a head in December 2025, when the company outlined a reset after engagement with activist investor Elliott Investment Management, which had built a roughly $4bn stake.
“We will accelerate organic revenue growth, deliver record productivity savings and improve core operating margin,” said CEO Ramon Laguarta at the time, adding that PepsiCo would step up investment in advertising and innovation while simplifying operations. The message was clear enough: it’s doubling down to get the business moving faster and working harder.
Pruning and pushing at the same time
So the cuts are real, but they’re not the whole story. This isn’t shrinkflation of the business; it’s strategic deflation – stripping back to fund a different kind of growth. The company has become far more direct about where it sees demand heading: snacks and drinks that feel more purposeful, with added protein, fibre, whole grains and fewer artificial ingredients.
For a long time, scale covered a lot of sins in FMCG. Extra SKUs could sit in the system without too much consequence. That’s getting harder. Shoppers are more selective, private label is stronger and price increases don’t land as easily as they once did. PepsiCo’s own results show that while pricing helped, it didn’t fully offset softer volumes.
Fewer SKUs should mean simpler operations, clearer brand messaging and better use of marketing spend. It should also make life easier for retailers under pressure to justify every inch of shelf space. But there’s a trade-off. Snacks thrive on variety. New flavours, limited editions and niche lines all help keep brands interesting. Cut too far and the range risks feeling safe rather than compelling.
Timing adds another layer of complexity. The business is being simplified at the same moment it’s expected to return to growth. Changes to manufacturing, supply chains and product lines don’t happen in isolation but ripple through the system. Savings in one area can create friction in another.
Function first, but not joyless
Like many others adapting to appeal to today’s more health-conscious consumer, PepsiCo is rethinking what a snack should be. The shift towards protein, fibre and simpler ingredients is everywhere – and especially visible in its recent launches. Doritos Protein is the most obvious example, delivering 10g of protein per serving following its rollout earlier this year.
“Doritos is one of the most iconic brands in snacking, and with Doritos Protein we’re expanding into the protein snack category in a way that stays true to what people love about the brand – bold flavour and crunch – while delivering the added benefits consumers are increasingly looking for,” said Hernán Tantardini, chief marketing officer at PepsiCo Foods US.
That balancing act runs through the wider pipeline. Pepsi Prebiotic Cola brings fibre into soft drinks without straying too far from the original taste profile. Smartfood FiberPop and SunChips Fiber tap into the growing conversation around digestive health. Tara Glasgow, PepsiCo’s chief science officer, described it as a “pivotal moment” as awareness of fibre accelerates, with the company trying to anticipate “where consumers are headed”.
It’s a sensible read of the market. People aren’t giving up snacks, but they’re asking more from them. Protein and fibre have become shorthand for something better, even if the reality is more nuanced. The aim is to meet that expectation without losing the familiarity that keeps consumers coming back.
The challenge is that everyone else is moving in the same direction. Functional snacks are no longer niche. From startups to established brands, the space is crowded and competitive. PepsiCo may have scale and distribution, but neither guarantees credibility.
There’s also a broader tension around what ‘better’ really means. Adding protein or fibre doesn’t fundamentally change the nature of a snack, and consumers are becoming more aware of that. Lean too heavily on functional messaging without backing it up and scepticism follows.
Widening the brief
If the product pipeline is about making snacks work harder, recent dealmaking shows how PepsiCo is expanding where those snacks – and its brands – can exist.
In January 2025, it completed its $1.2bn acquisition of Siete Foods, bringing in a brand built on simple ingredients and strong cultural identity in Mexican-American cuisine. It also gave the company greater credibility in a space where it has historically been less present.
“We’re committed to transforming our portfolio to include more positive choices that meet evolving consumer needs,” said Steven Williams, CEO of PepsiCo North America, at the time. “Siete has built a strong, authentic brand with products people love, and we see a significant opportunity to make those products more widely available.”
The acquisition of poppi followed in May for approximately $1.95bn, adding a fast-growing modern soda brand positioned around prebiotic benefits and lower sugar. It provides a foothold in a category that sits somewhere between traditional soft drinks and functional wellness beverages.
More telling is how the business is stepping into entirely new territory. Earlier this month, it launched Pilla Tortilla in Spain, turning Lay’s into a restaurant concept rather than just a packaged product. Pol Codina, senior VP of PepsiCo Food Ventures, framed it as a move into new occasions and formats, however, it signals a clear intent to edge into meal-based consumption, not just snacking.
It also reflects a growing willingness to take its brands beyond the shelf and into direct consumer experiences, where it has far less heritage. That shift opens up new routes to growth, but also brings PepsiCo into closer competition with foodservice players and changing expectations around quality, freshness and execution.
The expansion of its Spanish chilled soup brand Alvalle into hot soups in February reinforces that shift. Alvalle itself isn’t new to the group (it’s owned the brand since 1999) but this move pushes it into a different category. Traditionally associated with gazpacho and warmer-weather consumption, the brand is now being repositioned as a year-round proposition with ready-to-heat vegetable soups. That places the company in the chilled prepared meals space, with a different set of competitors and expectations around freshness, nutrition and convenience.
It’s evident that PepsiCo is testing how far its brands can stretch beyond the traditional snack aisle, even as it works to make the core business leaner and more focused.
Behind the scenes, there’s a parallel effort to support that shift. The company has been increasing local sourcing, expanding hedging strategies and investing in AI across agriculture and manufacturing. It’s also continuing to push its sustainability agenda, from regenerative farming initiatives to energy projects like the solar installation at its Leicester site. These are practical responses to volatility in commodities, climate and supply chains.
Even so, the reset isn’t happening in a stable environment. Costs remain unpredictable, regulatory pressure is building around ingredients and pricing practices have come under scrutiny, including a high-profile FTC case in 2025 over alleged price discrimination. While that case was dismissed, it highlighted growing tension between large suppliers and smaller retailers. At the same time, shoppers are pushing back on price, forcing companies to rethink how far they can stretch value perception.
All of that creates a more uneasy picture than PepsiCo would like. It’s simplifying, but the world around it is becoming more complicated. It’s trying to premiumise through function while also addressing affordability, while keeping control of a very large and complex system.
That makes PepsiCo worth watching. It’s not stepping away from snacks – it’s trying to reshape what a global snack business looks like. Leaner, more focused and more functional, but still rooted in brands people recognise and enjoy. Whether it holds together is the real test.
