PepsiCo plans 1,000 job cuts as North American business comes under pressure

PepsiCo is planning to cut about 1,000 jobs in North America, where sales of some of its drinks and snacks have struggled to pick up. The company is also reviewing how its North American teams are organised. Ram Krishnan, CEO of PepsiCo North America, informed employees on 9 November that changes would be made to reduce management layers and simplify operations.

The announcement follows a difficult period for the business. Customers are spending more carefully, and PepsiCo has been under pressure to make some of its products more affordable.

Fewer drinks are being sold

PepsiCo's third-quarter figures show that beverage volumes in North America dropped by 2% compared with the same period last year. Food volumes were flat. The company has tried lowering prices on selected products, including Lay's and Doritos, while increasing its marketing efforts. It also cut its full-year earnings forecast in October. PepsiCo is competing with other brands while dealing with customers who are more selective about what they spend on snacks and drinks.

Coca-Cola wins KFC's US business

The pressure on PepsiCo also extends to its restaurant supply contracts. KFC has chosen Coca-Cola to supply drinks to more than 3,600 restaurants in the United States. This ends a relationship with PepsiCo that has lasted nearly 40 years. The change applies to KFC's US outlets. PepsiCo will remain the beverage supplier to the chain in international markets. It is a significant account to lose, although PepsiCo has also secured a 10-year beverage supply agreement with Subway in the US.

EMEA brings in $5.41 billion

PepsiCo's business in Europe, the Middle East and Africa reported $5.41 billion in revenue during the third quarter. Organic revenue grew by 9%, with beverage volumes up 4%. Food volumes, however, declined by 1%. The figures offer a different picture from North America, where the company is struggling to get sales moving. However, the EMEA result covers several markets and does not mean that every African country recorded growth.

What this means for African businesses

PepsiCo's performance matters to African businesses that supply, distribute and sell its products. This includes transport companies, packaging suppliers, agricultural producers, warehouses, retailers and independent distributors. Growth in the EMEA division could support demand across parts of the region, but the reported revenue figures do not tell us how much of that growth came from Africa or how much reached local suppliers.

For smaller businesses working with large food and beverage companies, the bigger issue is how these companies manage their supply chains, procurement and distribution costs. PepsiCo's cost cutting efforts in North America also show the pressure multinational food companies face when customers start buying less. African suppliers dealing with these companies need to pay attention to changes in orders, pricing and contract terms.

The North American job cuts do not mean African operations will face the same changes. But PepsiCo's results show that even a large international brand has to adjust when consumer spending weakens.