Purchase, N.Y.-based PepsiCo took control of its [image-nocss] distribution operations earlier this year, said the report, spending $7.8 billion to buy its two biggest bottlers, partly to establish a more direct relationship with retailers.
Consumer-products makers have always worked closely with stores, the report said. But with consumer spending soft and big brands competing for shelf space with private-label goods, some companies, like PepsiCo, Campbell Soup Co. and Hershey Co., are intensifying those efforts, it said.
Camden, N.J.-based Campbell Soup is working with stores to make soup aisles more attractive and easier for consumers to navigate. The soup maker says it has researched shopper reactions to soup labels, and earlier this year started working with retailers to lay out many of its soups in color-coded sections to help consumers identify categories. For example, stores use green labels on shelves with Campbell's health-oriented soups.
Recently, candy maker Hershey has begun a major study of how consumers make their way through stores, trying to identify where they are most likely to buy chocolate. Hershey, Pa.-based Hershey said it is sharing its findings with retailers to try to persuade them to display its products in the most favorable spots.
"Talking with your [retail] customers is really important, and I have been doing a lot of that," Foss told the newspaper.
He said retailers he has visited have told him they would like to run more promotions that combine PepsiCo products, such as displaying six packs of Pepsi and bags of Doritos tortilla chips side by side, and offering discounts for purchasing them together.
Some of these bundles can be tailored for specific retailers. In a convenience store, for instance, a bundled promotion might include single bottles of PepsiCo promoted with smaller packs of snacks, said the report.
"Our [retail] customers really want to be able to differentiate themselves from their competitors," Foss told the paper. PepsiCo benefits when stores sell its snacks and drinks together, but it was harder to coordinate such promotions before PepsiCo bought its bottlers.
Shortly after the acquisition closed in late February, Foss met with Rick Lawlor, vice president of retail at New York City-based gas station/convenience retailer Hess Corp. The two men discussed how PepsiCo could get its products to Hess's shelves faster. They also discussed developing joint snack and drink promotions tailored for Hess c-stores.
Since then, Lawlor said that it has gotten easier to work with PepsiCo. He said he has noticed that sales representatives for PepsiCo's snacks and drinks businesses cooperate more closely on plans to get the right mix of chips and sodas to his stores.
PepsiCo said it has found that working more closely with retailers can help it in testing marketing ideas. In March, Foss and his marketing counterpart at PepsiCo, Massimo d'Amore, visited retailers around San Antonio, partly to evaluate an idea: offering more products in Texas that cater to Hispanics. Local retailers said it made sense. This year, PepsiCo plans to test more drinks tailored to Hispanics, including brands it currently markets in Mexico, at San Antonio retailers that have a big Hispanic clientele, the Journal reported.
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