Cut in workforce, cost and product lines: How PepsiCo is restructuring itself

PepsiCo is preparing for layoffs as well as a simplification of its US portfolio. This comes after extensive discussions with activist investor Elliott Investment Management.

According to a report in The Economic Times, the restructuring would include cost cuts, automation and a reduction of 20 per cent in the product lines. It plans to do so to close the gap with rival Coca-Cola against which it had underperformed over the past five years.

Investor Elliott is key to this as they had pushed PepsiCo to take bold steps, including prioritising its bottling operations as well as divesting its non-core food brands, as per the report. Elliott argued that PepsiCo’s massive portfolio had become complex and was dragging down the company’s performance.

The food and beverage giant also began a review of its North American supply chain as consumers are also shifting towards healthier snacks and smaller pack sizes.

Jennifer Wells, chief people officer in North America, told Bloomberg News that they would be making structural changes to their business that will affect some roles. The layoffs would affect roles in the US and Canada. Nearly one-fifth of PepsiCo’s US product portfolio would be eliminated, several manufacturing lines would be shut down and there would be a push towards affordability. It already announced the closure of Frito-Lay facilities in Orlando, leading to more than 450 layoffs.

PepsiCo’s plan includes “ensuring affordable price tiers and simpler ingredients”, ramping up automation, as well as digitisation.