PepsiCo commits to increased marketing despite hit to profit

PepsiCo committed to increasing its marketing spend despite admitting spending on high profile campaigns for brands such as Pepsi and Doritos had dented profits during its second quarter.

PepsiCo is hoping ongoing global campaigns for brands like Doritos drives sales

The Mountain Dew owner saw revenues climb 2 per cent year-on-year to $16.1bn (£10.5bn) over the period as sales for its top food brands helped offset weak drink sales. Global drinks volumes rose 1.5 per cent, while snacks jumped 3 per cent.

The company credited a 13 per cent increase in marketing in the quarter as a key reason for its better than expected performance. It vowed to invest further “in advertising and marketing, innovation, and other marketplace initiatives” to maintain growth, despite admitting that activty such as its global campaign for Doritos and promotions around its Pepsi tie-up with Beyonce had weakened profits.

It is hoped the push can help spark life into the company’s struggling beverages unit as growing consumer demand for healthier products hit demand in its key North America and Europe markets. Volume in North America dropped 3.5 per cent and remained flat in Europe, while the number of drinks sold rose 9 per cent in Asia, the Middle East and Africa. The business will be hoping upcoming activity for its drinks brands, such as its global Pepsi partnership with Beyonce and activity around summer music festivals, can help steer them back into growth.

The Pepsi brand is being outpaced by rival Coca-Cola cola in the UK this year, according to IRI Worldwide, after it managed to close the sales gap in 2012.

Indra K. Nooyi, chairman and chief executive of PepsiCo, said: “We have stepped our market based execution across the board. For example, we are driving even greater partnership with our customer by engaging in joint business planning that aligns our product, brands and in-store merchandizing capability with our customer’s growth strategy. The scale and complementary nature of our categories makes us a clear partner of choice with our customer to drive their growth.”

Elsewhere, revenue from its Americas snack division leapt 5 per cent to $6.03bn (£3.9bn), including a 4 per cent increase in North America. Drink and snack sales at its Asia, Middle East and Africa division increased 6 per cent to $1.87bn (£1.2bn). Revenue in Europe crept 1 per cent higher to $3.65bn (£2.4bn).

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