Pepsi merger to create distribution agility

PepsiCo’s merger with its bottlers will likely mean greater agility in getting products to market and more joint marketing between PepsiCo’s beverage and snack brands, PepsiCo executives reported Monday.

CEO Indra Nooyi said that PepsiCo plans to ramp up cross-promotion between Pepsi products and Frito-Lay snacks, building on the statistic that consumers pair a beverage with salty snack about 90 percent of the time.

“We are well-positioned to leverage our total scale and breadth through joint promotions… product bundling, shopper insight, and programs that address consumers’ strong desire for greater value,” Nooyi told reporters during a conference call.

She and Eric Foss, head of the newly formed Pepsi Beverages Company (PBC) unit and former chairman and CEO of Pepsi Bottling Group, also highlighted the partnership’s expected distribution agility – something that Nooyi said has already paid dividends. A major retailer called before the Super Bowl, she said, and requested a list of snack and beverage products that he wanted in 24 hours.

“Normally, that would have taken us four, six, eight weeks to work out,” Nooyi said. “In this case, in less than 24 hours, we had everything sorted out, and the product was on the truck.”

That agility will also apply to new beverage products, Foss said. With such broad distribution control, PBC will be able to test new products in select East or West Coast markets, then determine whether they fit PepsiCo’s national DSD or warehouse system – though Foss said some categories may not warrant PepsiCo’s attention. After all, as Nooyi pointed out, PepsiCo is now the second-largest food and beverage business in the world, and the third largest consumer products company in the world.