Activist Elliott wants PepsiCo to emulate Coke's playbook. This is why.

By James Rogers

Activist Elliott Investment Management has amassed a $4 billion stake in PepsiCo and wants the consumer-goods giant to take a leaf out of Coca-Cola's book

Activist investor Elliott Investment Management has amassed a $4 billion stake in PepsiCo, it said Tuesday.

Activist investor Elliott Investment Management wants PepsiCo Inc. to emulate rival Coca-Cola Co. by refranchising its "operationally intensive" bottling network as part of a broader effort to reaccelerate growth and boost the company's financial performance.

In a statement released early Tuesday, Elliott said it has amassed a $4 billion stake in the Purchase, N.Y.-based company (PEP) over the past several months. The activist investor sent a presentation and letter to Pepsi's board outlining a strategy to improve its operations.

In the statement, Elliott said that PepsiCo's recent performance has been marked by a series of strategic and operational challenges. "These have led to poor financial results, sharp stock-price underperformance and a highly dislocated valuation," Elliott added.

PepsiCo's stock rose 2% in midday trading, paring earlier intraday gains of as much as 6.2%. It has slipped 0.3% in 2025, while Coca-Cola shares (KO) have rallied 10.4% and the S&P 500 index SPX has gained 8.4%.

PepsiCo's underperformance has been much more pronounced over the past two years, with the stock dropping 13.5% over that time while Coca-Cola shares have advanced 15.9%.

In the letter, Jesse Cohn, managing partner at Elliott, and Marc Steinberg, partner, urged the company to consider refranchising PepsiCo Beverages North America's bottling network.

"PepsiCo should evaluate the potential refranchising of PBNA operationally intensive bottling network - as its closest peer has and as PepsiCo itself has done in years past - to allow each business to focus on its core competencies," they wrote. "PepsiCo should also conduct a review of its brand and [stock-keeping unit] portfolio with the goal of reducing operational complexity and creating a more focused PBNA."

The proposed move to refranchise PepsiCo's bottling attracted attention on social media. Writing on X, Jim Osman, founder of the Edge Group, which provides analysis of activist ideas, noted that when Coke refranchised its bottling in 2017, margins soared.

In the presentation, Elliott wrote that "since acquiring its bottlers in 2009/2010 in pursuit of strategic flexibility, PBNA has profoundly underperformed" both the Coca-Cola system and Keurig Dr Pepper Inc. (KDP) on growth as well as margins.

Elliott said that the current structure of PBNA "has failed to deliver for many years and its shortcomings are more evident than ever, as PepsiCo has not responded to a changing landscape." Elliott also urged PepsiCo to "right-size" the cost base for Pepsi Foods North America "for the current demand environment," as well as to streamline the portfolio.

Elliott's latest disclosure of its equity holdings showed that it did not own any PepsiCo shares as of June 30.

In a statement sent to MarketWatch, PepsiCo said that it maintains an active and productive dialogue with its shareholders and "values constructive input" on delivering long-term shareholder value. "We note Elliott Investment Management's disclosure of its presentation and will review its perspectives within the context of our strategy to drive sustainable growth," the company said.

PepsiCo said its current strategy includes investments in innovation, portfolio transformation and international growth. "We are confident that the successful execution of these initiatives positions PepsiCo to accelerate growth, strengthen our competitive advantage, and deliver meaningful, long-term value for our shareholders," the company said.

-James Rogers

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