The layoffs mark “the latest step in a long-running effort to trim costs as demand softens for some of its soft drinks and snacks,” according to the Chicago Tribune, which broke the story. PepsiCo officials did not respond to calls and emails seeking comment.
Approximately 2,000 people work in PepsiCo’s Chicago office, another local media source reported. PepsiCo representatives declined to confirm either number (total employees or jobs cut), but said the number of Chicago-based employees is “minimal.”
As of December 2013, PepsiCo’s US operations employed about 106,000 people. Thus, the Chicago staff accounts for less than 2% of the company’s US workforce, and the layoffs affect less than 0.1%.
"We are committed to handling affected individuals with care and offering transition assistance to all impacted employees," a PepsiCo official told the Tribune.
The official said PepsiCo "remains committed to having a strong presence in Chicago," the Tribune reported. However, the company is also “transforming how we operate through a more integrated structure across the PepsiCo businesses based in Chicago, which will fuel our success moving forward."
Lean, mean nutrition machine
In the past two years, PepsiCo has been trying to simultaneously cut costs and build its brands in the face of weakening demand. Its Gatorade, Naked, Tropicana and Quaker products represented about 20% of total company revenue in 2013.
The road has been rocky for the beverage and snack maker, as evidenced by recent turnover in the company’s upper echelons and a bitter public conflict with an activist investor.
Debra Crew, who had been president of the North America Nutrition division, left this past summer and was replaced in September by Oswald Barckhahn. He had been senior VP of Tropicana North America. Crew subsequently became president and chief commercial officer of R.J. Reynolds tobacco company.
Also last summer, Brian Cornell resigned as CEO of PepsiCo Americas Foods to join Target as chairman and CEO. Last month, PepsiCo president Zein Abdalla announced he would leave at the end of 2014.
Peltz pounds Pepsi's brass
Earlier this year, FoodProductionDaily.com’s sister site, BeverageDaily.com, reported, “PepsiCo has hit out at activist investor Nelson Peltz for continuing to press for a split between its beverage and snack arms, and says his use of data is ‘selective, and in many instances misused’.”
Peltz’s firm, Trian Fund Management, announced in April 2013 that it had acquired a significant stake in PepsiCo. Also on the board of directors of Mondelez International, Peltz began pressuring PepsiCo to separate its global snacks and beverage businesses, just as Kraft had split into Kraft Foods Group and Mondelez in late 2012.
According to BeverageDaily, PepsiCo’s board and management team sent Peltz a letter saying they had thoroughly analyzed his recommendations and concluded that “PepsiCo's value is maximized as an integrated food and beverage company."