Pepsi shifting from the tail of the portfolio to the core of the portfolio--boosts marketing by $600 million and lays off 3% of workforce

In recent years, PepsiCo has diversified its portfolio of beverage and food holdings as soft-drink sales declined cross-industry. However, some say part of the Pepsi decline was due to its turning away focus from its carbonated drink business. But now the company is refocusing its marketing efforts around beverage sales in order to catch up to rival Coca-Cola.

And, they appear to be paying for their marketing on backs of employees.

The company reported job cuts of about 3 percent of their workforce—or 8,700 jobs just as they’re boosting marketing spending for its brands by as much as $600 million. The job cuts are said to save PepsiCo $1.5 billion by 2014.

Pepsi is focusing on 12 key brands, including flagship Pepsi-Cola, Mountain Dew, Gatorade and Tropicana. The marketing boost follows a re-branding of its products over the last couple of years. Pepsi CEO Indra Nooyi calls this an attempt to “slowly start shifting volume [growth] from the tail of the portfolio to the core brand portfolio,"

“Running a large company is like doing a car race,” CEO Nooyi said today in an interview on Bloomberg Television. “Occasionally, you have to stop and refuel yourself in the pit stop, and that is what we’re doing in 2012.”

Pepsi will be spending on display racks and delivery routes, as well as a new global advertising campaign for Pepsi-Cola due out in the Spring.

Sources: WSJ.com, Businessweek and Daily Gossip (image)

 


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