PepsiCo readies multi-million dollar investment in brands

PepsiCo plans to cut 8,700 jobs as part of a strategy to save an extra $3bn (£1.9bn) over the next three years as it looks to free up funds for new marketing initiatives to take on rivals Kraft Foods and Coca-Cola.

/l/g/q/pepsicoproducts_copy.jpg

The marketing investment will have a particular focus on PepsiCo’s 12 core brands including Pepsi-Cola, Tropicana, Doritos and 7-Up, as the company looks to increase ad spend by as much as $600m (£378m) to boost beverage sales.

PepsiCo says that its marketing will have a “particular focus” on North America, which will be in part funded by the 3% cut to its global workforce.

It will also spend up to $100m (£63m) on in-store activity and displays this year, alongside reducing the number of rostered agencies to support the new marketing direction. PepsiCo will increase investment each year as a percentage of its revenues.

Coca-Cola the world’s largest soft-drinks maker by revenue, earlier this week announced a global cost-cutting imitative, that aims to make up to $400m (£253m) in annual savings by 2015, which will be reinvested into marketing campaigns.

PepsiCo’s announcement comes as its net profit rose 3% in the fourth quarter year-on-year to $1.4bn (£882m), while revenues were up 11% to $20.1bn (£12.7bn). Revenue in Europe and Asia rose 31% and 16% respectively.

The strategy marks a new direction for the business, which has in recent years focused on healthy foods in favour of its core brands. Some analysts have called for the company split its drinks and snacks business to revive its drinks brands, similar to Kraft’s decision to split its North American grocery business from its global snack business.

Indra Nooyi, CEO and chairman at PepsiCo, says: “In a year characterised by a challenging macroeconomic environment and political turbulence, we took advantage of gains from strategic adjustments to our portfolio to reinvest in key capabilities and markets.”

Latest from Marketing Week

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3711 or email subscriptions@marketingweek.com

If you are looking for our Jobs site, please click here