PepsiCo To Ratchet Up Sales, Marketing Initiatives

PepsiMedia companies may find PepsiCo knocking on their doors a little louder over the next year. The beverage giant's CEO said repeatedly Tuesday that revitalizing domestic sales of its soft drink Gatorade and other brands is paramount for the company over the next year. And she hinted that an increased marketing investment will play a key role.

"We are taking major actions to restore the vitality of our North American beverage business," said Chairman-CEO Indra Nooyi.

New packaging and merchandising initiatives will be rolling out over the next few months as part of a "re-staging of our key brands" for 2009, she said. Also coming: an "entirely new contemporary identity" for Gatorade. Tropicana will also get a new coat of paint, so to speak, Nooyi said.

The beverage business in the U.S. "is not performing where we would like it to be," and revving it up is "a huge priority for us," she added.



Nooyi offered her repeated pledge to drive domestic growth on a conference call to discuss PepsiCo third-quarter results. What's known as the "liquid refreshment beverage category," which covers soft drinks Gatorade and Aquafina, saw a decline of 3% by one metric in North America. That contributed to an 11% operating profit decline for all PepsiCo beverages in North and Latin Americas. (The company cited the economy as an issue.)

Nooyi did not reveal any details about plans for the resuscitation efforts, but a Reuters report Friday, citing coverage in Beverage Digest, said packaging redesigns will be widespread. Mountain Dew, for example, will be reflagged as "Mtn Dew" in some cases.

Executives at PepsiCo have been focusing on developing the "multifaceted effort to restore growth and profitability" for some time, Nooyi said. Pepsi announced a cost savings plan that she said will lead to $1.2 billion in pre-tax savings over the next three years. Much of that is ticketed for investments in the North American beverage operations.

Notable results from the new North American-targeted initiatives will not come until the second half of 2009, as it will take some time for the revitalization plans to take hold, Nooyi explained.

Nooyi said PepsiCo is committed to investing in retaining and attracting new customers during the economic slowdown, rather than retrenching.


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