Purchase, New York – PepsiCo has announced a strategic overhaul aimed at reducing its product lineup and lowering prices, responding to pressure from an activist investor seeking to boost company growth and profitability. The beverage and snack giant revealed on Monday that it plans to eliminate nearly 20% of its product offerings by early next year.

The company, known for popular brands like Cheetos and Tostitos, aims to utilize the financial savings from this consolidation to fund marketing initiatives and enhance consumer value. Specific details regarding which products will be discontinued or the extent of price reductions have not yet been disclosed.

In its commitment to innovation, PepsiCo plans to introduce new products that feature simpler ingredients. Upcoming launches will include healthier options such as Doritos Protein and newer versions of Cheetos and Doritos that are free from artificial flavors and colors. The company has also rolled out a prebiotic variant of its flagship cola.

These changes come in the wake of Elliott Investment Management’s $4 billion stake acquisition in September, as the investment firm urged PepsiCo to clarify its strategic direction. In correspondence to PepsiCo’s board, Elliott expressed concerns about stagnant growth and dwindling profitability in its North American operations.

Marc Steinberg, a partner at Elliott, emphasized their confidence in PepsiCo’s ability to deliver shareholder value through this new plan. He acknowledged the collaborative nature of their engagement with the company’s management and highlighted the urgency of their initiatives to enhance affordability and drive innovation.

Elliott plans to maintain its close relationship with PepsiCo as they work together to implement these changes. In after-hours trading on Monday, PepsiCo’s shares remained stable, reflecting investors’ cautious optimism.

The company projects organic revenue growth between 2% and 4% by 2026, building on a modest 1.5% increase in organic revenue during the first three quarters of this year. As part of its strategic review, PepsiCo is also examining its supply chain and intends to make leadership adjustments within its board to better align with global market demands.

Chairman and CEO Ramon Laguarta expressed optimism about the company’s proactive measures to enhance both its marketplace position and financial health. He referred to the urgency surrounding these initiatives as crucial to achieving the company’s growth targets.

In light of changing consumer preferences and a series of price increases in recent years, PepsiCo acknowledged that demand for its products has been affected. The company previously announced efforts to counter perceptions of high pricing by expanding the availability of its value brands, such as Chester’s and Santitas.