– PepsiCo to cut 8,700 jobs as part of growth strategy (Food Navigator, Feb. 9, 2012):
PepsiCo plans to cut 8,700 jobs, with a particular focus on North America, as part of a wider strategy to drive growth, the company said on Thursday.
– PepsiCo To Cut Jobs, Boost Marketing; Lowers 2012 View (Wall Street Journal, Feb. 9, 2012):
NEW YORK -(Dow Jones)- PepsiCo Inc. (PEP) will boost its marketing budget by as much as $600 million this year and will lean on a dozen core brands, including its flagship Pepsi-Cola, to try to catch up to its top rival Coca-Cola Co. (KO), especially in North America where results have been sluggish.
PepsiCo is cutting about 3% of its global workforce, or 8,700 jobs, and uncovering other cost savings to fund the larger investment behind Pepsi, Mountain Dew, Gatorade, Lays, Doritos and other top brands, as well as to offset what it expects to be another year of historically high commodity prices. The productivity program is expected to produce $1.5 billion in cost savings by 2014.
The plan was unveiled as part of a much-anticipated strategic overhaul at PepsiCo, which is trying lift shares that have stagnated in recent years while Coca-Cola has enjoyed stronger growth. PepsiCo’s performance has been marred by a series of missteps, ranging from larger problems like underinvesting in some of its key beverage brands to smaller issues like bags of Sun Chips that irked consumers because they were too noisy.
The restructuring will hurt results in the current year, causing core earnings growth to fall 5%, but PepsiCo said it will get back to long-term earnings growth in the high-single digits in 2013.