Pepsi to increase marketing spend at expense of 8,700 jobs

Posted on 10 Feb 2012 by Tim Brown

International food and beverages giant PepsiCo will cut approximately 3% of its workers across 30 countries as part of a programme to save up to $1.5bn by 2014.

The restructuring is designed to offset high commodity costs and an increased spending on advertising and marketing. The firm plans to increase advertising and marketing support behind its global brands by $500-600m in 2012, with particular focus on North America.

PepsiCo said it is undertaking a multi-year productivity programme for cost savings under which it will: consolidate manufacturing, warehouse and sales facilities; and implement simplified organisation structures, with wider spans of control and fewer layers of management.

“This includes headcount reductions of about 8,700 employees across 30 countries, about 3 per cent of the company’s global workforce,” PepsiCo said. PepsiCo CFO Hugh Johnston said the company has to take “some tough decisions” to implement its strategic priorities in 2012.

“In a volatile global environment over the past five years, PepsiCo has delivered double-digit compound annual growth in core net revenue, 8% compound annual growth in core EPS, and returned about $30 billion to shareholders in the form of dividends and share repurchases,” said PepsiCo chairman and CEO Indra Nooyi.

To drive efficiencies, it will reduce the number of agency partners and also take steps to leverage the global scale of its top brand platforms. In its global portfolio of food and beverage brands, PepsiCo has 22 different brands that generate more than $1 billion each in annual retail sales and total net revenues of over $65 billion.

Exact details of the which jobs will be impacted are yet to be released.