PepsiCo Inc. (PEP) is about to get a lot simpler. The snack and beverage giant announced Monday it's cutting nearly 20% of its U.S. product lineup as part of a sweeping operational overhaul backed by activist investor Elliott Investment Management.

The Big Cleanup

CEO Ramon Laguarta says the changes are designed to "accelerate organic revenue growth, deliver record productivity savings and improve core operating margin – starting in 2026." Translation: fewer products, better margins, happier shareholders.

But this isn't just about trimming fat. PepsiCo is simultaneously rolling out what it calls cleaner-label products with simpler ingredients, ditching artificial colors and flavors while adding nutritional perks like protein, fiber, and whole grains. Think Simply NKD Cheetos and Doritos, refreshed Lay's and Tostitos, and a new Doritos Protein line launching in 2026.

The pivot comes after Elliott disclosed an approximately $4 billion stake in PepsiCo back in September, pushing for changes to address what the activist firm saw as an overly complex brand portfolio and shrinking beverage market share. Marc Steinberg, a partner at Elliott, said the new plan's focus on affordability and accelerated innovation paired with aggressive cost cuts should drive stronger revenue and profit growth.

The company is also reportedly planning job cuts in North America, according to Bloomberg, though PepsiCo hasn't commented publicly on those reports.

Strong Earnings Despite Headwinds

Despite softer volumes, PepsiCo's cost management delivered third-quarter earnings of $2.29 per share, topping Street expectations of $2.26. Revenue came in at $23.94 billion, just above the $23.85 billion consensus.

Looking ahead, the company is projecting organic revenue growth of 2-4% for fiscal 2026, excluding acquisitions and currency swings. That compares to analysts' average estimate of around 2.7%.

PepsiCo has been navigating some choppy waters lately, including subdued consumption trends and the June shutdown of its Frito-Lay production facility in Rancho Cucamonga, California, after more than 50 years of operation. The stock has also declined over the past year, adding pressure from shareholders.

Market Performance and Outlook

On a year-to-date basis, PepsiCo stock is down 3.05%. On Monday, shares edged up 0.42% to close at $145.63.

The restructuring represents one of the more significant strategic shifts for PepsiCo in recent years, with the company betting that a leaner portfolio combined with healthier product innovation can reignite growth in a challenging consumer environment. Whether trimming 20% of products while launching protein-packed Doritos is the winning formula remains to be seen, but Elliott clearly believes simplification is the path forward.