US: PepsiCo heads back to basics as pressures mount
PepsiCo expected to announce new strategy in 2012
The new CEO of PepsiCo Americas Beverages plans to renew the group's focus on core soft drinks brands in the US in order to improve sales and investor confidence.
Al Carey told the Beverage Digest-sponsored 'Future Smarts' conference that PepsiCo should not be afraid to promote its core carbonated soft drinks range. He signalled that he will plough more resources into this core area of the group's US business in 2012.
"I'm proud to sell CSDs," he told conference guests, according to a Sanford Bernstein report of the event. "If you're going to push healthy, you still need to push indulgence," he added.
Carey's comments come as PepsiCo's CEO, Indra Nooyi, is facing disquiet among investors. There are concerns that the company has strayed too far from its core business and, by doing so, has not created enough shareholder value. PepsiCo's share price is only around 2% up on five years ago, while The Coca-Cola Co's shares are trading almost 44% higher than December 2006.
PepsiCo is currently undertaking a strategic review of its business. There is growing speculation that the firm will need to announce a significant change early in 2012 in order to reassure shareholders. Yesterday, the New York Post reported that the soft drinks giant is considering cutting up to 1,000 jobs in order to increase its marketing budget.
At the conference yesterday, Carey said that the company would fund more research into sweeteners, as well as invest more in its key 'Power of One' strategy, which is designed to create sales synergies between the firm's North American drinks and snacks divisions.
Sanford Bernstein analysts said that Carey's comments were "very consistent" with their own analysis of likely PepsiCo moves. Last week, the analysts said that, in early 2012, they expect the firm to announce a "multi-year programme for brand/business revitalisation".
There continues to speculation that greater changes could be on the cards, such as a split in the business or the overthrow of Nooyi. However, Bernstein analysts said: "We do not expect (although do not rule out entirely) a potential break-up of PepsiCo no near-term CEO changeover."
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