PepsiCo ( (PEP) ) just got a $4 billion wake-up call.

One of Wall Street’s most aggressive activist investors, Elliott Management, went public with a sweeping critique of the iconic snack and soda giant. In a letter sent to PepsiCo’s board, Elliott calls for immediate changes — including a review of its sprawling bottling operations — to unlock what it claims is over 50% upside for shareholders.

Despite its global reach and blockbuster brands like Frito-Lay and Pepsi, Elliott says the company has lost focus, underinvested in its core businesses, and allowed margins to erode — especially in North America.

PepsiCo, for its part, recently announced cost-cutting measures, but Elliott says more must be done. The investor’s plan includes a potential refranchising of bottling operations, asset sales, and new financial targets — all under tighter board oversight.

Why PepsiCo faces pressure now

PepsiCo has all the right brands — but lately, it’s missing the mark.

That’s the case Elliott Management makes in a new $4 billion challenge to the company’s strategy. The investment firm says PepsiCo’s core North American businesses are slipping, and it’s not just about tough market conditions — it’s self-inflicted.

Elliott points to years of underperformance in the company’s beverage arm, PepsiCo Beverages North America, which it says has fallen behind competitors like Coca-Cola. Among the firm’s concerns:

• PepsiCo’s bottling operations, which Elliott calls “operationally intensive” and ripe for refranchising.
• A bloated lineup of brands and SKUs, which has “strained focus and execution.”
• Soda market share losses, despite the company’s deep distribution network.

Even the historically strong Frito-Lay snack business is feeling the heat. Elliott says profit margins at PepsiCo Foods North America have eroded as spending rose “well beyond the needs of the current demand environment.” In short, the firm believes PepsiCo is overextending in places that no longer justify the cost.

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While PepsiCo has announced cost cuts, Elliott is pushing for more — and not just trimming. The firm wants the company to reset its approach, tighten operations, and focus on what still works.

What Elliott wants to change

Elliott’s message to PepsiCo is clear: You’ve got great assets — now do more with them.

The firm laid out a five-part plan to help PepsiCo reverse course and regain investor confidence. At the center of the proposal is a call for PepsiCo to refranchise its bottling operations, a move Elliott says would let the company focus on branding and marketing instead of the logistics of production.

It’s a familiar playbook — Coca-Cola has already gone down this path. Elliott notes that PepsiCo has even done it before, and argues the company should revisit the idea now that the bottling structure is dragging down margins.

The investor also wants PepsiCo to cut complexity. That means fewer low-performing brands, fewer SKUs, and a sharper focus on the core products that drive growth. On the food side, Elliott is calling for an operational review at Frito-Lay, realigning costs with actual demand, and possibly divesting underperforming assets.

Beyond cost and structure, Elliott is urging more investment in what’s working — like its international unit, and top-performing snack brands — while pushing for clear new financial targets and stronger board oversight to make sure the changes stick.

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The firm isn’t asking PepsiCo to reinvent itself. Instead, it wants the company to double down on what made it great — but with tighter discipline, smarter execution, and accountability to match.

Where PepsiCo stands financially

Let’s look at the numbers.

In Q2 2025, PepsiCo pulled in $22.73 billion in revenue, ahead of Wall Street’s expectations for roughly $22.28 billion. That’s a modest year-over-year 1% rise — but a beat nonetheless. Adjusted earnings per share came in at $2.12, comfortably above the $2.03 consensus estimate 

That said, the bottom line wasn’t pretty. Net income tumbled to $1.26 billion, or 92 cents a share, down sharply from $3.08 billion and $2.23 per share in Q2 2024. The culprit? A hefty $1.86 billion impairment charge tied to brands like Rockstar and Be & Cheery 

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Digging deeper, region-by-region performance tells the full tale:

• North America volumes slipped — 1% for food, 2% for beverages — even as demand for Pepsi Zero Sugar and strategic commercials helped stabilize margins.

• International markets were the standout. The EMEA region posted robust growth, fueled by strong pricing, while Latin America and the IB franchise also gained traction. These regions now account for roughly 40% of global revenue.

All said, PepsiCo isn’t imploding — but it’s treading water in its home market while leaning on international sales, innovation, and cost discipline to keep the ship afloat.