Pepsi takes $1b punt on Russia

Posted by James Ferre on 7th July 2009

PepsiCo, one of the world’s largest food and beverage companies, has announced plans for a US$1 billion (A$1.25b) investment in Russia over three years, together with its partner The Pepsi Bottling Group (PBG) as they look to emerging economies to counter a weak American marketplace.
“I am delighted to announce that over three years we expect to invest $1 billion in our beverage and food businesses in Russia,” said PepsiCo Chairman and Chief Executive Officer Indra Nooyi. “This investment reflects very clearly our great confidence in Russia and our long-term commitment to this very important market.”

PepsiCo and PBG are planning significant investments to build a state-of-the-art warehousing and distribution infrastructure for the Lebedyansky juice business as well as new production facilities. And PepsiCo, the largest private user of potatoes grown in Russia, plans to continue its substantial investment in local agriculture, applying the latest technology to ensure the highest productivity and quality standards.

These investments continue a major expansion effort by PepsiCo and PBG that began in the late 1990s, with the opening of the companies’ first beverage plant of the modern Russian era, followed by the opening of PepsiCo’s first snack manufacturing facility in Kashira in 2002.

“Russia is a very attractive growth market,” said PBG Chairman and Chief Executive Officer Eric Foss. “The investments we’re making in our Russia business are creating new jobs, providing us with the flexibility to produce a wider range of beverage offerings for consumers, and enabling us to better serve our valued retail partners. Our new plant in Domodedovo reflects our serious commitment to future expansion in Russia. We’re looking forward to playing an active role in the country’s business community for many years to come.”

When operating at full capacity, the Domodedovo plant will be larger than any bottling plant currently in PepsiCo’s global system.

The plant incorporates a number of water-saving and energy-saving features designed to reduce its environmental impact, including a state-of-the-art water filtration system that uses ozone molecules for purification. It is also the first PBG plant in Russia equipped to produce ultra-light PET plastic bottles on all bottling lines, with labelling technology that uses no glue, less plastic and less energy than traditional labels.