Pepsi sends a shocking memo to employees

PepsiCo (PEP) North America plans to cut about 1,000 jobs across its North American operations over the next week, according to a Nov. 9 letter to employees from CEO Ram Krishnan, CNBC reported .

The letter described a goal of building what Krishnan called a "stronger, more future-fit business that delivers industry-leading growth." PepsiCo wants to better connect teams across its North American operation, which runs both its beverage and snack businesses.

The memo did not say which roles would be cut. But the timing tells part of the story.

PepsiCo has been struggling with weak demand in the United States and Canada, and the job cuts signal that management has decided the situation calls for more than price adjustments and marketing spending.

Krishnan's letter, as reported by CNBC , did not name the specific roles or divisions that would lose positions. PepsiCo has not issued a public statement beyond what the memo contained. The company employs about 125,000 people in the United States, according to a company filing, and roughly 306,000 globally.

The 1,000 planned cuts are a small share of the global total. But they land squarely on the North American operation, which is the part of the business that has been underperforming. That makes the percentage hit to that specific unit larger than the headline number suggests.

PepsiCo said the restructuring is meant to make the business faster and improve how teams work together. That language points to coordination problems within the North American structure, not just a cost problem.

Why PepsiCo is struggling in North America

In October, PepsiCo lowered its full-year earnings forecast, blaming North America. The third quarter showed the scope of the problem. North American beverage volumes dropped 2%. The food division was flat. Neither business was growing.

CFO Steve Schmitt told analysts on the earnings call that the recovery was taking longer than the company expected, BigGo Finance reported. PepsiCo had already tried cutting prices and spending more on marketing. Neither move produced a sustained volume rebound.

So the company moved to costs instead. Price cuts did not work. Marketing did not work. Now PepsiCo is reorganizing headcount and hoping that gets the job done.

PepsiCo is not alone in cutting roles. This year has seen widespread job reductions across industries, LiveNOW from FOX noted.

Heineken announced up to 6,000 cuts. Nike cut more than 2,000 positions. UPS eliminated up to 30,000 operational roles. Amazon shed roughly 16,000 jobs earlier in the year.