NEW YORK — Elliott Investment Management has amassed a roughly $4 billion stake in PepsiCo and is preparing a major activist campaign aimed at reviving the food and beverage company’s flagging stock, according to people familiar with the matter. The investment makes Elliott one of PepsiCo’s largest shareholders and among its top five active investors outside of index funds.
The move comes as PepsiCo grapples with declining soda sales, intensifying competition, and sluggish growth in its food business. Once a fierce rival to Coca-Cola, Pepsi has slipped to fourth place in U.S. soda sales volume, behind Coke, Dr Pepper and Sprite. Meanwhile, PepsiCo’s food business, home to brands such as Lay’s and Doritos, has also lost momentum. The company’s market value has fallen by more than 25% since May 2023, shrinking to about $200 billion from a peak of $270 billion.
Elliott is urging PepsiCo to take bold steps, including exploring a refranchising of its bottling operations, similar to Coca-Cola’s restructuring in 201, and strengthening its beverage division with sharper marketing and innovation. The hedge fund highlighted PepsiCo’s North America beverages unit as an underperformer, citing share losses, strategic missteps and unfocused brand launches. Some analysts and industry watchers have also argued that the company should consider spinning off its beverage business entirely.
PepsiCo has stated that it will review Elliott’s proposals “within the context of its strategy,” which already includes efforts to reduce costs, enhance integration between its snacks and drinks units, and reposition flagship brands with cleaner ingredient lists. Chief executive Ramon Laguarta, who has led the company since 2018, has also emphasized offering consumers more value and boosting retail placement.
Elliott, with more than $76 billion under management, has a history of activist campaigns at major companies. Last year, it took multibillion-dollar stakes in Honeywell and Starbucks, prompting changes that included a potential breakup at Honeywell and a leadership shake-up at Starbucks. Its campaign at PepsiCo, one of its largest ever, signals mounting pressure on the company to deliver a turnaround.
PepsiCo shares rose about 2% Tuesday following reports of Elliott’s involvement.
