PepsiCo Will Shift Marketing Dollars Back to Soda
NEW YORK -- Following a strategic review of its business, PepsiCo Inc. will likely plan a renewed marketing push for its core soda business, along with sizable cost reductions, according to a Wall Street Journal report.
The company will announce the conclusions of its review early in February.
This move indicates support for CEO Indra Nooyi, who has faced pressure from some shareholders to split the company due to slow soda sales during her five years in the role. "The board supports Indra and the management team, and its ability to execute its strategy and vision to create shareholder value," said James Schiro, an independent director of PepsiCo.
Rather than a company breakup, it is more likely that PepsiCo will cut costs by eliminating jobs and increasing its marketing budget by 20 percent, the news outlet reported. The company lowered its profit outlook twice in 2011; it blamed high commodity costs and a difficult consumer environment.
Some of the company's critics reportedly want PepsiCo to emulate Kraft, which split into a global snacks business and a grocery business in North America. Proponents of this plan believe PepsiCo's beverage business is harming its better-performing snacks business. However, Nooyi has stated that these businesses are complementary and help PepsiCo benefit from scale.
PepsiCo executives have thus far rejected such a plan. Meanwhile, other investors believe PepsiCo can still thrive on its major brands, such as Mountain Dew and Gatorade, according to the report.