PepsiCo to Cut 8,700 Jobs, Focus More on Marketing

PepsiCo plans to cut 8,700 jobs which constitute 3 percent of its global workforce in an effort to offset the commodity costs.

The restructuring was announced despite the soft drink maker posting a 4 percent increase in its net income for the fourth quarter ending December 31.

PepsiCo's Q4 net profit rose to $1.42 billion or 89 cents per share as against the $1.37 billion, or 85 cents per share, year on year.

The restructuring is expected to save $1.5 billion for the maker of Tropicana juice and Gatorade sports drink by 2014.

However, the company would be focusing more on the marketing strategies of its products with increased investment in advertisement and marketing.

PepsiCo plans to spend $500 million to$600 million for aggressive marketing of its products in the year 2012 with an additional investment of $100 million in store racks, displays and coolers.

The marketing strategy would be focussed on its 12 brands, including Pepsi-Cola, Lay's, Gatorade, Tropicana, 7-UP and Doritos.

The soft drink makers including PepsiCo and Coca Cola are facing major challenges as the raw material costs have increased many times.

The higher-than-average costs of commodities are pushing these companies to offset the rising costs by other means such as employee restructuring and aggressive marketing.