PepsiCo faces GLP-1 and Elliott pressure
PepsiCo is facing mounting pressure to meet growth and margin targets after activist investor Elliott Investment Management acquired a $4 billion stake in the company. The threat of GLP-1 weight-loss drugs could impact PepsiCo's salty snacks and sugary drinks business. PepsiCo reported its third-quarter results on October 8, with a focus on North America where volumes have declined.
CEO Ramon Laguarta is dealing with higher input costs due to the Iran war and inflation affecting consumer demand. Elliott pushed the company to improve performance in North America. In December 2025, PepsiCo announced plans to cut nearly 20% of its US product range by early 2026 and aim to expand core operating margin by at least 100 basis points over three fiscal years. They also promised a supply chain review and board refresh.
Despite these efforts, PepsiCo's core operating margin fell 15 basis points in the first half of the year to 16.3% of revenue, contrary to the December target. The second quarter was mixed, with net revenue rising 6.4% and organic revenue growing 2.4%. However, PepsiCo Foods North America revenue fell 2%. CEO Laguarta stated North America was softer than expected, and they see a more gradual improvement this year.
Weight-loss drugs have pushed other food makers to offer healthier products. PepsiCo has launched Doritos Protein, SunChips Fiber, and Good Warrior beef sticks. However, valuations show concern. PepsiCo's enterprise value has dropped to 10 times EBITDA from 18 times in mid-2022. Coca-Cola has moved ahead. PepsiCo's shares are down 12% this year and 16% since Elliott invested.
Analysts expect third-quarter revenue to grow 4.3% to $24.96 billion and adjusted earnings per share to rise slightly to $2.29. PepsiCo's efforts in its US Frito-Lay business have fallen short of expectations, with sales flat and market share loss. Analysts believe improvement in North America will be gradual, and the recent chip price increase in line with inflation may be justified. Elliott and PepsiCo did not respond to requests for comment.
Written by urgent.news from The Economic Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
