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Summary of diving:
- Last month, executives told investors that PepsiCo had begun testing the integration of its two largest North American business units — snacks and beverages — into a more integrated distribution model to cut costs and increase productivity in Texas.
- The food manufacturer’s warehouse consolidation plans for the two businesses are part of an initiative to improve its cost structure over the next three to four years. Investments in data technology and systems have provided the necessary support for integrity, executives told investors in July.
- “Texas is probably the state where we have the most opportunity given the low share in beverages, high share in snacks, when we put those businesses in one warehouse and serve customers from one distribution point, that gives us a lot of upside,” Ramon LaGuerta, chairman and CEO of the company, said in an Oct. 9 earnings call. “So we’ll see. We’re testing and learning in Texas.”
Diving Insights:
LaGuerta said the Texas Pepsi project is part of the company’s One North America strategy to reduce costs, improve margins and increase growth. After testing the plan, the company will decide how to roll it out across the country.
“The final solution will not be a solution for the entire country,” LaGuerta said. Therefore, depending on the location of the market and the size of the market and where the population lives in different parts of the country, there will be more accurate solutions.”
Declining consumer spending and changing eating habits have forced food manufacturers to align production and costs with their changing markets. PepsiCo followed the Texas announcement with an announcement in November that it will close a pair of Frito-Lay facilities in Orlando, Florida, including a manufacturing plant and an on-site warehouse on Nov. 4 and an off-site warehouse on May 9, 2026.
LaGuerta told investors that the company is preparing to address future demand, not past demand, which means more concentration among a few retailers or customers.
“We have to assume that the consumer is looking for pickup or delivery and digital more than they are today,” LaGuerta said.
Editor’s note: This story was first published in our Weekly Operations newsletter. Register here
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