PepsiCo demerger alerts agencies to possible review

Agencies were this week seeking reassurances about the future of millions of pounds worth of business after PepsiCo’s decision to spin off its fast-food chains.

Agencies were this week seeking reassurances about the future of

millions of pounds worth of business after PepsiCo’s decision to spin

off its fast-food chains.



They are anxious to know whether the demerger and creation of an

independent company to run the Pizza Hut, KFC and Taco Bell operations

will put long-term relationships in jeopardy.



In the UK, the pounds 8.2 million KFC account has been handled by Ogilvy

and Mather for three years while Abbott Mead Vickers BBDO picked up the

pounds 6 million Pizza Hut business in 1995 as a result of an

international realignment within the BBDO network.



Reports circulating in the US suggest the change could put pressure on

BBDO’s grasp on Pizza Hut, which has been sustained by the close

relationship between Phil Dusenberry, BBDO’s creative chief, and Roger

Enrico, PepsiCo’s chief executive.



The move to float off PepsiCo’s restaurant division as an independent

company comes in the wake of intensified competition in the US fast-food

market, which has hit the company’s profits, and the unsuccessful

dollars 500 million Pepsi ’blue’ relaunch.



Agency sources in the UK anticipate that any change to advertising

arrangements are unlikely to happen quickly.



’It’s early days and advertising will be well down the list of

priorities of the new company,’ one source commented.



A PepsiCo senior executive said: ’I can’t see the change having any

implications for agencies at the moment.’



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