PepsiCo shifting Gatorade to direct-store delivery

by Eric Schroeder
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PURCHASE, N.Y. — PepsiCo, Inc. on Sept. 1 said it will change how it distributes its Gatorade products from a warehouse-delivered go-to-market system to direct-store delivery through both company-owned and independent bottlers in the United States and Canada. The company expects the change to become effective Jan. 1, 2011.

“This is a clear example of using PepsiCo’s broad set of go-to-market systems to best serve our customers,” said Massimo d’Amore, chief executive officer of PepsiCo Beverages Americas. “We remain dedicated to the existing warehouse distribution system for some of our beverage products, but the change to direct-store delivery makes sense for Gatorade as we redefine the sports nutrition category through the G Series. As a company, we are committed to bringing a wider variety of products to market more quickly and efficiently than ever before.”

PepsiCo said the move to direct-store delivery marks the first large scale step for the company as it heads toward optimizing delivery systems following the bottling acquisitions earlier this year. The expected synergies related to these changes are included in the company’s target of $400 million in pre-tax annualized synergies from the bottling acquisitions once fully implemented by 2012, PepsiCo said.

“The distribution of Gatorade in key trade channels of convenience, U.D.S. (up-and-down the street) and dollar is well suited to the direct-store delivery model due to its high velocity, so the switch will result in better store-level customer service,” said Eric Foss, c.e.o. of Pepsi Beverages Co. “By achieving greater speed, simplicity and flexibility, we will be able to better serve the current and future needs of both our retail customers and consumers in the marketplace.”

Other PepsiCo brands that are warehouse-delivered to the key trade channels of convenience, U.D.S. and dollar will not be affected by the change, PepsiCo said. Those brands include Tropicana, Quaker and Naked Juice.
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