PepsiCo Chairman and Chief Executive Officer Indra Nooyi hit the reset button this year, revealing a plan to eliminate 8,700 jobs to help fund $1.5 billion in savings by 2014 and drive shareholder returns.
The transformation involves reinvesting money gained through such measures into global mega brands, including an additional $500 million to $600 million earmarked for advertising and marketing Pepsi, Lay’s, Tropicana, Gatorade, Mountain Dew, Doritos, Quaker, Sierra Mist/7UP, Cheetos, Lipton, SunChips and Mirinda globally in 2012.
An extra $100 million will be poured into in-store assets like racks, displays and coolers. “I spend a large part of my time talking to our customers, visiting stores to see what’s happening in the marketplace and working with our teams to find new ways to better meet the needs of retailers and consumers,” Nooyi told SN.
A rationalization of PepsiCo’s agency partners from 150 for North American beverage to 50 is another of the efficiencies put into place. The move to better align brand messaging comes two years after Diet Coke surpassed Pepsi-Cola for the first time to take the No. 2 spot behind share-leading Coca-Cola.
“As we execute our brand-building initiatives, our expectation is to see our brand equity scores strengthen over the course of the year, building off of a solid base. This should begin to translate to incremental top-line benefits later this year and into 2013,” said Nooyi during PepsiCo’s first-quarter earnings call.
Nooyi’s plan also emphasizes innovation to improve the consumer experience and draw new users to its so-called mega brands. Pepsi Next, a 60-calorie version of PepsiCo’s flagship product with 60% less sugar, is appealing to those who wouldn’t otherwise drink soda.
“Interestingly, Next is sourcing from outside the cola category. In fact, it’s even sourcing from outside the CSD category, which means lapsed cola users are coming back into the cola category,” she said.
New Quaker Medleys is likewise gaining a following by making consumption easier for those who don’t have a lot of time for breakfast. Offered in a convenient single-serve heat-and-eat bowl, it’s providing a premium breakfast anywhere there is hot water or a microwave.
On the international front, a new global structure is helping the Purchase, N.Y.-based manufacturer leverage its size, scale, resources and ideas while bringing relevant products to new places in world. It’s launched hot oats and healthy bars and cookies under the Quaker brand in Australia and similar products under the locally relevant Wimm-Bill-Dann Chudo brand in Russia, said Nooyi.