PepsiCo to cut 1,000 North American jobs
The restructuring follows weaker food and beverage performance, a lowered earnings forecast and an ongoing efficiency drive aimed at restoring growth in PepsiCo’s largest market.
USA – PepsiCo plans to cut approximately 1,000 jobs across North America as the beverage and snacks manufacturer steps up restructuring efforts to revive sluggish sales and improve operational efficiency in its home market.
The job reductions are expected to take place over the coming week and form part of efforts to simplify the company’s organisational structure, according to a letter sent to employees by PepsiCo North America CEO Ram Krishnan.
“The goal is to move faster, execute better, and invest behind the opportunities that will drive our growth,” Krishnan said.
PepsiCo employs approximately 306,000 people globally, including around 125,000 in the United States, according to its company filing as of December 27.
The restructuring comes as the Lay’s and Gatorade maker faces weaker demand for higher-priced snacks, sluggish beverage sales and elevated input costs across North America.
Last month, PepsiCo lowered its full-year earnings forecast after reporting continued weakness in the region, particularly within its beverage division.
For the third quarter, the company reported net revenue of US$25.27 billion, representing a 5.6% increase from the previous year. However, performance across its North American businesses remained under pressure.
Net revenue at PepsiCo Foods North America was unchanged year-on-year, while the division’s core operating profit declined 12%. Meanwhile, beverage volumes in North America fell 2%, while food volumes remained flat.
The company has introduced price reductions and increased marketing investment to stimulate demand. However, Chief Financial Officer Steve Schmitt said during its earnings conference call that the turnaround was taking longer than anticipated.
The latest job cuts form part of a broader cost-efficiency programme launched after activist investor Elliott Investment Management acquired an approximately US$4 billion stake in PepsiCo a year ago.
The company has since pursued productivity savings and organisational changes to restore growth across its North American food and beverage portfolio.
PepsiCo is also facing changes to its restaurant partnerships. KFC recently selected Coca-Cola as its beverage supplier across 3,718 US restaurants, ending a relationship with PepsiCo that had lasted approximately four decades.
However, PepsiCo will retain its international KFC beverage partnership, supplying more than 25,000 restaurants across approximately 145 countries.
The restructuring marks another step in PepsiCo’s efforts to address weakening demand and strengthen profitability in North America.
Sign up HERE to receive our email newsletters with the latest news and insights from Africa and around the world, and follow us on our WhatsApp channel for updates.
