Pepsi Just Can't Stop Pulling the Tab After Shaking Up Management

Last Updated Jun 22, 2011 10:35 AM EDT

Since November 2007, PepsiCo (PEP) has moved senior executives within the marketing ranks of its soda and beverage brands eleven different times, the last three of which were confirmed June 20 by Ad Age. Nineteen of the top marketers at Pepsi were not in their jobs three years ago, according to Carlos Laboy, an analyst with Credit Suisse.

This time around, two of the new top marketers at Pepsi carry the comedic job titles of "senior VP/global hydration" and "president/global enjoyment." The former is actually in charge of Aquafina and SoBe; the latter oversees trademark Pepsi and other soft-drink brands. Don't worry if you don't understand the logic of their titles; there'll be another management shuffle coming along in a few months.

Pepsi's main problem, of course, is that it needs to stop reorganizing altogether. The company has spent so long in a series of management shuffles that management shuffling is now at the heart of its strategic problems. It's a peripheral issue at most companies. Executives leave, taking their institutional knowledge with them. Greenhorns take a while to get up to speed. Time is lost while they switch ad agencies. But rarely do personnel moves imperil the brand itself.

'Executives close to the company are baffled'


At Pepsi, CEO Indra Nooyi has tolerated such a high level of turnover on her soda portfolio that it is as if the company is going through the same kind of crisis as when a CEO moves on and fails to name a successor: The entire place is grinding to a halt while everyone figures out who's on first.

As a result, Pepsi's progress in the marketplace is faltering. Its social media strategy has been left in the dust by Coca-Cola (KO). Pepsi the brand now runs third in popularity behind Coke and Diet Coke. Gatorade abandoned its name in favor of a a series of confusing sub-brands such as "G Prime 01," and "G Recover 03." Ad Age noted:
Executives close to the company are baffled as to how the new structure will operate, questioning who, exactly, brand teams will report to.
To illustrate that, consider that I've been writing this blog longer than Jill Beraud, the former chief marketing officer/PepsiCo Beverages America, held her job. In the new move, Beraud is being replaced by three (!) execs:
  • Lorraine Hansen from Kraft will be svp/global hydration.
  • Brad Jakeman, former evp/chief marketing officer at Activision Blizzard becomes president/global enjoyment and chief creative officer.
  • Simon Lowden, previously a chief marketer at Pepsi International, becomes chief marketing officer of PepsiCo Beverages Co.in North America, excluding Gatorade and Tropicana.
  • All three report to CEO-PepsiCo Beverages America Massimo d'Amore, who reports to Nooyi, except Lowden, who reports to Eric Foss, the CEO of Pepsi Beverages Co.
More churn ahead
If you can understand the difference between the "CEO-PepsiCo Beverages America" and the "CEO of Pepsi Beverages Co.," you're a better person than I. Their titles imply that one supervises U.S. operations while the other has international duties, but Lowden, the North America marketer, reports to Foss, who has the non-American title. Hmm.

The company is poised for more churn among its agencies. Omnicom (OMC) ad agencies BBDO, TBWA/Chiat/Day and OMD handle Pepsi globally, but they all have new clients now. That does not bode well: new clients tend to want their own teams, not the previous guy's. The years of experience that Omnicom has acquired serving Pepsi may now, also, get thrown out the window.

The constant in all this is d'Amore (pictured), who has been in the same job the longest and to whom all the others (mostly) report. Normally, when a chief marketer sits atop a brand for a period of years, they become so expert at the job that improvements are seen in sales and reputation. That is not happening at Pepsi. It is he who bears ultimate responsibility for the mess underneath him. Presumably, Nooyi's patience has a time limit.

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