PepsiCo may not be a roll-up, but its public clash with Elliott Management gives private equity investors and operating partners a close-up view of how a large company can accumulate complexity far beyond what its operating model can handle. Elliott, an activist hedge fund, recently disclosed a multibillion-dollar stake in PepsiCo and released a detailed presentation (view here) urging the company to refocus its operations.
The fund’s critique places particular emphasis on product sprawl, segment performance, structural choices, and the overall weight of the portfolio. These themes also appear often inside private equity–backed platforms as they grow and add layers that strain execution.
In this newsletter, we break down the patterns Elliott highlighted and the lessons they offer for investors and operators building and managing platforms of their own.
1. Years of incremental decisions created a heavy operating model
PepsiCo’s structure expanded steadily through small additions that accumulated across its beverage, food, and international segments.
[Elliott Slide 39 – SKU count comparison vs. Coca-Cola]
The beverage division carries far more products than its closest competitor, and revenue per product has not kept pace. The North American foods division expanded its manufacturing base faster than demand warranted. Quaker Foods trailed other segments for years. These shifts formed gradually and now require significant resources while delivering uneven results.
Private equity platforms often develop similar load as products, service lines, and internal projects accumulate. Expansion that begins as manageable eventually produces a structure with more moving pieces than the operating team can guide effectively.
2. Reassessing the portfolio gives the core business room to work properly
Elliott encourages PepsiCo to step back and evaluate the entire portfolio along with the systems supporting it.
[Insert graphic: Elliott Slide 31 – recommended actions across beverages and foods]
Their recommendations include a full SKU review, an assessment of the bottling network, adjustments to capital spending, and clear milestones for tracking progress. The goal is a structure that supports reliable execution and reduces unnecessary internal effort.
Growing platforms like roll-ups often need a similar review. Some products offer limited contribution, certain initiatives consume time without material outcomes, and older business lines can remain in place long after their relevance fades. Portfolio rationalization reduces this drag and gives teams a structure they can operate effectively.
3. A cleaner portfolio helps the strongest parts of the business stand out
PepsiCo still maintains many competitive advantages that Elliott’s materials point out.
[Elliott Slide 49 – Frito-Lay performance]
[Elliott Slide 17 – international growth trajectory]
Frito-Lay continues to lead its categories and drive strong economics, international markets grow steadily, and the distribution system remains extensive. These capabilities remain intact but become harder to see when surrounded by under-performing assets and product overload.
Private equity platforms often discover the same pattern. A standout service line or product can carry the business, yet the surrounding complexity blurs where the real value sits. A solid refocusing effort brings attention back to the engines that matter.
4. A lighter structure makes it easier to match expectations with results
Elliott points to the gap between PepsiCo’s stated goals and the actual performance of certain divisions.
[Elliott Slide 36 – margin expectations vs. actuals]
The beverage segment has carried margin expectations for multiple planning cycles, yet results have shown limited movement. This creates uncertainty for investors evaluating future plans.
Likewise for investor-backed platforms, forecasts attract more scrutiny when the structure grows crowded. Products, assets, and internal processes that made sense before eventually muddies the way the company performs. A portfolio with assets that better align with one another helps shrink the distance between projected and actual results by reducing internal complexity and giving operators more visible paths to progress.
5. Refocusing on proven strengths reopens growth
Elliott outlines several directions for PepsiCo once its operating structure becomes easier to manage.
[Slides 47, 61, 63 – zero-sugar beverages, snacks, international]
Their materials highlight growth in zero-sugar beverages, international markets, and expanded investment in the snacking business. These areas align with where PepsiCo already performs well, making it easier to focus capital and attention.
Brand portfolios often find that growth improves after initiatives are refocused. Cycle times shorten, capital becomes easier to deploy, and teams concentrate on segments with real traction. Growth becomes more durable when the operating model is structured correctly.
The takeaway for private equity platforms
Elliott’s engagement with PepsiCo reflects a pattern seen across many investor-backed companies. Structures expand through long sequences of decisions. Product catalogs grow. Internal programs accumulate. Eventually the company carries a shape that no longer reflects how the business should run.
Platforms that revisit their structure regularly stay closer to the realities of their business rather than the residue of older strategies. This keeps execution tight, communication clear, and the operating model ready for the next phase of growth.
Kenny & Christian