PepsiCo to cut 8700 jobs

PepsiCo will cut 8700 jobs from its global workforce and spend more money on marketing its brands.

The job cuts represent 3 per cent of the food giant’s workforce for the maker of Pepsi brand soft drinks and Doritos, which forecasted a decline in 2012 earnings last year, but has produced better fourth quarter results than expected.

It announced cost cuts of $US1.5 billion ($AU1.4 billion) last year and said the reduction in employee numbers will also save the company another $US1.5 billion.

The decline in profits for the company could be an indication that consumers are finally heeding health warnings and turning to healthier snacks and beverages.

Earlier this month, Hostess, the US manufacturer of the famous processed cakes Twinkies and Ding Dongs filed for bankruptcy, and health experts have called for a tax on sugary drinks which they say could save 26 000 American lives each year.

Coca-Cola has also announced job cuts this week, but expects to eventually restore the job placements as it continues to steam ahead of rival PepsiCo, particularly with its overseas businesses.

The beverage giant found huge success with the ‘Share a Coke’ campaign, when it printed the 150 most popular first names in Australia on the labels of bottles.

The campaign performed so well, particularly on social media, that the company extended it through Christmas by adding holiday-themed names, and then invited consumers to vote on the last 50 additional names they wanted printed on bottles via its Facebook page.

PepsiCo said it is preparing for a year of “tough decisions” in the coming year, which is expected to be difficult for the manufacturer.

"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 earnings per share growth," chief financial officer Hugh Johnston said in a statement.

The company will increase advertising and marketing of its brands by $US500 million this year, expecting to spend a total of $US500 million.

Marketing will be largely focused on North America and the company is also planning on spending $US100 million on racks, displays and coolers for stores.

It will also increase dividends and share buybacks, as well as returning cash to shareholders.

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