PepsiCo’s CEO is confident the company’s planned investments in product prices will help to improve its sales volumes in the US.
On Monday (8 December), the US giant, which has been in talks with activist investor Elliott Investment Management, set out measures it hopes will improve its domestic performance
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Speaking to analysts yesterday, PepsiCo chairman and CEO Ramon Laguarta said several times the company’s plans to invest in price would help to boost volumes.
Asked by Citi analyst Filippo Falorni what made the Pepsi Max owner confident volumes would respond to more promotions and and lower listed prices, Laguarta said PepsiCo had tested its plans with three of its “largest” US customers over the past three months, adding the business has “very good metrics that gives us the confidence”.
Laguarta said: “Now, as we have developed the plans for [2026] with our customers, we have the space gains allocated by our customers, because we see the volume growing.”
“It’s a holistic space, price investment plan tested with our key customers over a meaningful period of time and that gives us quite a lot of confidence that the volume will come, which has positive impact obviously to the category but also to our leverage of fixed costs that will improve our operating margin.”
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By GlobalDataOne of the key objectives laid out by PepsiCo on Monday was “implementing sharper everyday value”. The Gatorade brand owner is looking to pursue a “targeted approach on affordable price tiers by brand and channel aimed at stimulating growth and improving the purchase frequency of our mainstream brands”.
Laguarta did not delve into which specific brands might be affected by the pricing strategy during the call.
While the bulk of the Mountain Dew maker’s focus is on improving “marketplace competitiveness and financial performance” within its North American foods business, Laguarta also told analysts the group planned to invest in “affordability entry points” in its international business.
Laguarta said: “In many of the emerging markets, we’re seeing a bit of a disposable income squeeze and therefore consumers asking us to be even more affordable. We’ll invest some of that productivity into affordability entry points but also into making our brands more known and preferred in international markets.”
In its statement on Monday, PepsiCo said the plan “incorporates constructive engagement”, noting it has the support of Elliott, which in September put pressure on the US-headquartered food and drinks giant to improve its financial performance.
Aside from the investment in price and promotions, PepsiCo repeated a pledge to cut “nearly” 20% of US SKUs early in the new year. Discussing third-quarter results in October, chairman and CEO Ramon Laguarta presented a reduction of around 15% in its North America food and drinks business as a means to “reduce supply chain complexity”.
PepsiCo’s other objectives are around portfolio innovation, and “aggressively reducing operating costs and improving operational excellence”, including SKU cuts and the previously announced closures of three US manufacturing plants.
However, the company’s plans did not include many significant updates.
As TD Cowen analyst Robert Moskow said in a note: “Our sense is that Elliott’s engagement created a greater sense of urgency for the company to execute its strategy, but the strategy did not change to a revolutionary degree.”
While forecasts for fiscal 2026 were outlined, the guidance for organic growth in the current year remained at low-single-digits.
PepsiCo said it expected to reach the higher end of that organic range in the second half of 2026, with a net contribution of one percentage point to reported revenue growth when accounting for acquisitions and divestitures made in 2025.
“In addition to the aggressive cost reduction actions being taken at PepsiCo Foods North America, we also intend to advance and accelerate our global productivity initiatives through more automation, digitalisation and simplification initiatives,” the company said.
“We aim to deliver a record year of productivity savings in 2026, benefiting in part from the actions taken in the second half of 2025.”
