Monday, April 20, 2009

Aligning bottler incentives with goals of Pepsi

Pepsi is acquiring its major bottling groups, in an attempt to better control the incentive conflict between Pepsi and its bottlers and over pricing, new product introduction, promotion, and quality. Points from the letter to the stockholders.
  • against a backdrop of changing Liquid Refreshment Beverage dynamics;
  • Provide flexibility across go-to-market systems to optimize revenue, productivity and costs by channel and customer;
  • Facilitate rapid decision-making and speed-to-market;
  • For these reasons, the combined beverage business would enhance our “Power of One” vision and contribute to a simplified, streamlined and agile beverage system.
I think this means that they want to better align the incentives of bottlers with those of Pepsi, particularly in the area of new product introduction, where the incentive conflict seems to cause a lot of problems.

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