Penny-pinching consumers took the fizz out of Pepsi’s beverage business, but the company plans to funnel more money into marketing after announcing it will cut 3,300 jobs.
Pepsi today reported net third-quarter earnings of $1.6 billion versus $1.7 billion for the same period in 2007. In a statement, the company blamed the U.S. beverage business for the performance.
“We were adversely impacted by continued weakness in the U.S. liquid refreshment beverage category, which resulted in disappointing performance in our domestic beverage business,” said PepsiCo chairman and CEO Indra Nooyi. The company did not outline how much more it would earmark for marketing, but said some of the estimated $1.2 billion it plans to save over the next three years will be applied to the marketing budget.
John Sicher, editor and publisher of Beverage Digest, Bedford Hills, N.Y., said Pepsi is not the only one suffering the effects of a weak economy. “The liquid refreshment business is down this year,” he said. “It probably has more to do with the economy than anything else. Some consumption is going back to tap water.”
But Sicher was optimistic about Pepsi’s