NY Post: Pepsi Will Lay Off 1,000 Employees to Fund New Marketing Initiatives

After a year in which Diet Coke surged past Pepsi as the third bestselling soft drink in the U.S., PepsiCo will dramatically increase the size of its marketing budget in 2012 and lay off more than 1,000 employees – including some at its Purchase, N.Y. headquarters – to partially offset the costs, according to The New York Post. While PepsiCo declined to comment on the matter, The Post cited three sources who confirmed the details of the plan.

“This is [CEO] Indra [Nooyi]’s attempt to take the company in a new direction,” a source told the newspaper.

PepsiCo spent $100 million less than Coca-Cola on soda advertising in 2010 and diverted much of its marketing resources on a vast social media campaign called the “Pepsi Refresh Project” that many claim stalled the growth of the brand. However, PepsiCo came back swinging this year as the soft drink giant launched the first new advertising campaign for its flagship cola in three years, paid $60 million to sponsor the television show “The X Factor,” and plans to air a number of ads during the Super Bowl in 2012.

Though PepsiCo is in the midst of planning a new strategic vision, some of its board members are rapidly losing patience with Nooyi. PepsiCo’s share price has remained flat under Nooyi’s five-year helm, while Coca-Cola’s stock has risen by 35 percent. Additionally, Nooyi has yet to assemble a succession plan, a task made even more difficult with the recent shuffling of marketing executives at the company.

Nevertheless, Al Carey, who was named the chief executive of PepsiCo Americas Beverages in September, expects a positive turn for PepsiCo as the company will look to invest in its core drink brands and new products during the coming year.

“I’m optimistic that 2012 will show improvement,” Carey said at a recent industry conference.