PepsiCo eyes global snack growth

Posted by Josette Dunn on 12th February 2010

US food and drink giant PepsiCo plans to build on its “global leadership” in “macro” snacks in 2010 through acquisitions and the development of healthier products.

The firm today (11 February) reported a 16% increase in full-year profits, driven by gains in its worldwide snack and international beverage businesses.

CEO and chairman Indra Nooyi said the Frito-Lay owner will take advantage of its “global leadership position” in “macro” snacks in a bid to capitalise on “huge growth opportunities” in the sector.

“First, we will continue to grow our current businesses in developed markets,” she told analysts on an earnings call.

“Second, we will extend our reach into new markets, as we have done in the past years in Pakistan and Vietnam [and] through targeted acquisitions as we did recently in the Balkans. And then we will continue to expand into adjacent categories.”

The third “more important” element of PepsiCo’s plan was to make its core snacks healthier through the use of heart-healthy oils, cutting salt and the addition of grains, nuts and seeds, Nooyi said.

“Our strategy is to rapidly expand our ‘good-for-you’ portfolio. PepsiCo currently has around a $10bn core of good-for-you products, anchored by Tropicana, Lebedyanski, Quaker, and the new dairy joint venture we entered into with Alamarai,” Nooyi said.

“We will augment the organic growth of these platforms through an increasing stream of science-based innovation. Some of these new products we plan for will come from targeted acquisitions and from joint ventures. But the larger number will be generated from the R&D that we have been ramping up over the past couple of years and which we will continue to expand.”

Earlier this month, Nooyi revealed an ambition to triple PepsiCo’s US$10bn revenues from the healthy drink and food market with the launch of several products.

Speaking to analysts today, the PepsiCo chief said that the success of its Quaker and Tropicana brands have created an “unbelievable” brand platform to grow the range, along with stepped up R&D capabilities, and its $10bn core base.

“I feel we have a great platform to expand the nutrition business from and I feel very good about our prospects here.”

Nooyi added that China offered “exciting” opportunities for the snack market.

“In snacks [in China] the market is wide open. They like the Western brands because they are a mark of quality. We are going to add a lot more products under the current banners…we’ve done great things with farmers in China and we are very excited about the country.”

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