PepsiCo to Eliminate 8,700 Positions, Focus on Marketing

PepsiCo plans to reduce it's workforce by 3 percent in an effort to focus more resources on marketing and advertising in 2012, according to a statement released by the company Thursday.

The strategic plan will eliminate about 8,700 jobs worldwide.

Calling 2012 a transition year for the company, PepsiCo Chairman and CEO Indra Nooyi said the changes are part of a long term plan to build on the 8 percent annual growth in core EPS and $30 billion returned to shareholders over the last five years.

"Our goal is to continue on that earnings trajectory over the next 5 to 10 years, fully recognizing that we need to make changes in how we operate to address the challenges we identified in the review process," Nooyi said in a statement.

The company plans to increase advertising and marketing spending by $500 to $600 million in 2012, focusing most of that spending in North America, the statement said. The company plans to use a share of revenues generated from its new strategy to maintain the marketing push moving forward.

Marketing is expected to focus on 12 of Pepsico's 22 brand's, including Pepsi-Cola, Lays, Gatorade, Tropicana, 7-Up and Doritos, according to a report from Reuters. The same report said the moves are part of PepsiCo's effort to recapture part of its U.S. market share lost to rival Coca-Cola in recent years.

Job cuts are expected to save PepsiCo $500 million in each of the next three years, the statement said. The statement calls the reductions a "productivity program", during which the company will use new technologies, consolidation and more simplified management structures to eliminate the positions. The cuts will be spread across 30 countries.

In its Thursday statement, PepsiCo said the changes are about growing brand recognition to create consistent future growth.

“As we implement our strategic priorities in 2012, we’ve had to make some tough decisions,” said Chief Financial Officer Hugh Johnston. “As a result, 2012 will be a year of transition, one in which we will make the right investments to position PepsiCo properly to achieve long-term high-single digit core constant currency EPS growth."

PepsiCo employs more than 900 people at its corporate headquarters located in Purchase.