PepsiCo to invest another $2.5B in China

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Published: May 21,2010

Tags: global markets, soft drink

NEW YORK — PepsiCo Inc. said today that it plans to invest an additional $2.5 billion in China in the next three years as the food and beverage maker looks to boost its presence in the growing market.

The company’s overseas business has become a strong factor in its success, with PepsiCo reporting last month that international growth pushed its first-quarter profit up 26 percent, as people in developing countries bought more of its snacks and drinks.

But competition is fierce. PepsiCo, whose brands include Tropicana and Gatorade, has pledged to invest more in its overseas business as it fights stagnation at home and in Europe. But rival Coca-Cola Co. plans to do the same in these high growth markets.

In the first three months of the year, PepsiCo posted double-digit gains in sales of snacks and beverages in India and China.

Money from the PepsiCo’s additional investment in China will be used to open 10 to 12 new manufacturing plants, create a new research and development center, open five new farms for potatoes and oats and to build its brands.

The new plants will be used to make soft drinks, non-carbonated beverages and snacks. Additional production lines will also be installed at existing facilities. Plants will be built in the provinces of Fujian, Gansu, Henan and Yunnan in the next two years as part of PepsiCo’s plan to expand in interior and western China.

“We look forward to continuing to evolve our business in China and offer Chinese consumers a full portfolio of foods and beverages ranging from soft drinks and juices to oatmeal and savory snacks,” Chairman and CEO Indra Nooyi said in a statement.

PepsiCo previously announced a $1 billion investment in the country that will be completed this year.

The Purchase, N.Y., company currently runs 27 beverage and food plants and five farms in China.

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