Oct. 1, 2012
PepsiCo, Inc., Purchase, N.Y., has invested in promoting its core brands, including Pepsi and Doritos, in fiscal 2012. The company expects constant currency earnings per share to decrease by 5% in what it calls a transitional year.
The company laid out long-term plans in February. They include an increase in advertising and marketing support behind global brands by $500 million to $600 million in 2012 and a multi-year productivity program designed to generate $1.5 billion of incremental cost savings by 2014. The program includes reducing PepsiCo’s global workforce by about 3%, or about 8,700 employees.
Through a 24-week period ended June 16, PepsiCo’s media spending was up over 30% compared to the 24-week period of the previous year.
“On brand building, we’re on target to increase our investment in advertising and marketing to 5.7% of revenue this year, which is an increase of 50 basis points over our investment level last year,” said Indra Nooyi, chairman and chief executive officer of PepsiCo, in a July 25 conference call. “We’ve made good progress on increasing our consumer facing A&M investment focused on 12 global mega brands to drive greater scale and impact with our spending.”
In line with brand building and cost reduction, the company in 2012 created a new executive position — president of PepsiCo that was filled by John Compton, formerly c.e.o. of PepsiCo Americas Foods. He became responsible for PepsiCo’s existing global category groups (global beverages, global snacks and global nutrition), global operations (I.T., global procurement, supply chain and productivity), global marketing services and corporate strategy.
Brian Cornell took over as c.e.o. of PepsiCo Americas. Most recently he was president and c.e.o. of Sam’s Club.
In September, however, Mr. Compton left PepsiCo to become c.e.o. of Pilot Flying J Oil Corp. in Knoxville, Tenn. Zein Abdalla, formerly c.e.o. of PepsiCo Europe, took over as president of PepsiCo.
In another management move, Debra Crew, previously president of PepsiCo’s Western Europe business, was named president, PepsiCo Americas Beverages. The new role, according to PepsiCo, is consistent with PepsiCo’s strategy to drive more integration, collaboration and efficiency across its businesses.
Through the fiscal year’s first 24 weeks, PepsiCo net income was $2.62 billion, or $1.65 per share, down 14% from $3.03 billion, or $1.89 per share, in the same time period of the previous year. Revenue increased to $28.89 billion from $28.76 billion.
PepsiCo Americas Beverages this year introduced Pepsi Next, a mid-calorie soft drink. Still, operating profit for PepsiCo Americas Beverages over the 24-week period dropped to $1.37 billion from $1.54 billion.
PepsiCo Americas Foods had 24-week operating profit of $2.41 billion, down 2% from $2.45 billion. Within the division, Frito-Lay North America introduced Doritos Jacked as well as Doritos Locos Tacos, which are sold at Taco Bell restaurants.
Operating profit in Asia, Middle East & Africa over the 24 weeks plunged 29% to $313 million from $445 million. Thanks to a boost from the 2011 acquisition of Wimm-Bill-Dann Foods in Russia, PepsiCo Europe’s operating profit over the 24 weeks jumped 14% to $534 million from $470 million.