PepsiCo has started cutting jobs in Chicago, the latest step in a long-running effort to trim costs as demand softens for some of its soft drinks and snacks.
The eliminated positions come from a variety of levels and appear to account for a sizable portion of PepsiCo’s Chicago office, the site of the company’s North America Nutrition division that oversees brands such as Gatorade, Quaker and Tropicana.
Affected employees were contacted Wednesday, according to people familiar with the situation.
PepsiCo, based in Purchase, N.Y., declined to confirm how many jobs were cut and called the number of Chicago-based employees “minimal.”
PepsiCo has been called out by activist investor Nelson Peltz, whose Trian Fund Management disclosed a stake in the No. 2 soft-drink maker in April 2013. Trian pushed PepsiCo to consider focusing its operations either by buying snack-maker Mondelez International or splitting its own snack and beverage businesses into two public companies.
Instead, PepsiCo’s board, led by Chairman and CEO Indra Nooyi, in February announced that it was keeping beverages and food together as one company after an “exhaustive review.”
PepsiCo also added five years to its ongoing productivity plan, taking the three-year plan set to end in 2014 through 2019. The company has said that its plan to cut $8 billion in costs over eight years includes simplifying its organization.
In a March letter to PepsiCo’s board, Trian’s suggestions included PepsiCo close facilities in Chicago and Purchase to reduce corporate costs.
“We are committed to handling affected individuals with care and offering transition assistance to all impacted employees,” the company said Thursday, adding that it “remains committed to having a strong presence in Chicago.”
“We are transforming how we operate through a more integrated structure across the PepsiCo businesses based in Chicago, which will fuel our success moving forward,” the company said.
The job cuts are the latest shake up for PepsiCo’s Chicago office, 555 W. Monroe St.
In September, PepsiCo named Oswald Barckhahn president of PepsiCo North America Nutrition, a promotion after his time as senior vice president of Tropicana North America. Barckhahn replaced Debra Crew, who left PepsiCo and in October became president and chief commercial officer of tobacco company R.J. Reynolds.
PepsiCo, the maker of Pepsi soft drinks, Frito-Lay chips and Tropicana juices, has also dealt with high-profile executive departures this year.
Brian Cornell in summer left his post as CEO of PepsiCo Americas Foods to become chairman and CEO of Target. And in November, PepsiCo said president Zein Abdalla was leaving at the end of the year.
Barckhahn now oversees PepsiCo’s nutrition businesses in the United States and Canada, which along with Tropicana includes Quaker, Gatorade and Naked Emerging Brands. Barckhahn has been with PepsiCo for more than a decade, but has spent most of that time outside of Chicago.
PepsiCo has been investing in and expanding its lineup of nutritious products under Nooyi, CEO since 2006. Such products accounted for about 20 percent of the company’s total revenue last year.
Still, while trying to grow its businesses, PepsiCo also has been cutting costs.
In 2012, PepsiCo announced plans to cut up to 8,700 jobs, or 3 percent of its global workforce, over three years. That included plans to cut about 150 Chicago-based employees. It is unclear how many jobs were cut as part of that plan.
As of December 2013, PepsiCo employed about 274,000 people, including about 106,000 in the United States. The number of U.S. employees at the end of 2013 was in line with a year earlier.
PepsiCo acquired Chicago-based Quaker Oats in 2001, a move that added Gatorade and Quaker brands to its lineup. Quaker moved its headquarters from 321 N. Clark St. to a new building at 555 W. Monroe St. in 2002, a move that was planned before PepsiCo bought Quaker. Chicago persuaded Quaker to keep its headquarters in the city with nearly $10 million in city assistance in 2000.
PepsiCo bought Naked Juice, a maker of high-end juices, in 2007.
In October, Barckhahn internally announced his leadership team, which largely works with him out of the Chicago office.
“Quaker, Tropicana, Gatorade and Naked Emerging Brands are terrific businesses in their own right, but reaching their full potential requires us to recognize that the whole is greater than the sum of its parts,” Barckhahn wrote in October, according to a copy of a memo obtained by the Tribune. “These businesses are truly better together, and we must manage them as such.”
By Jessica Wohl