Companies

PepsiCo unveils $2.5b spend

By Ding Qingfen (China Daily)
Updated: 2010-05-22 09:09

An employee supervises a bottling line at PepsiCo's Chongqing plant. PepsiCo plans to open 14 new plants for soft drinks, non-carbonated beverages and snacks and add production lines in existing facilities. [Provided to China Daily]

Cash for new plants, major expansion of research and development

SHANGHAI - PepsiCo, the world's second-largest food and beverage company, announced on Friday it would make an additional investment of $2.5 billion in China over the next three years, a move indicating the company's growing confidence in the massive market.

Indra Nooyi, chairman and chief executive officer of PepsiCo, made the announcement during her visit to the Shanghai Expo where PepsiCo is a sponsor of the US Pavilion. This comes after the $1 billion investment in China that the CEO announced in November 2008.

"The investment means China is a very, very important market for PepsiCo, and we want to be here for a very, very, very long time," said Nooyi.

"PepsiCo wants to invest in China and with China for long-term and consistent goals."

The new investment will go to building new plants, large-scale expansion of research and development operations, agricultural expansion and branding initiatives.

PepsiCo plans to open 14 new plants for soft drinks, non-carbonated beverages and snacks. And it will also add production lines in existing facilities.

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In response to the Chinese government's new guidelines on promoting foreign investment, the company said it will build the new plants in central and western regions, including Fujian, Gansu, Henan and Yunnan provinces.

PepsiCo currently operates 27 beverage and food plants throughout China and has more than 20,000 employees nationwide.

All new PepsiCo plants in China will copy the model of its beverage plant in Chongqing municipality which opened last year. The Chongqing plant, also the first "green" beverage plant in China that has received LEED (Leadership in Energy and Environmental Design) certification, uses 22 percent less water and 23 percent less energy on average than other PepsiCo plants in the nation.

PepsiCo will also build a "world-class R&D center in China" tailored for Asia, as well as its first global-level R&D center in China, in a bid to broaden its portfolio of products for Chinese consumers.

China is PepsiCo's largest market outside the US and also its fastest growing market.

PepsiCo said its first quarter revenue jumped 13 percent from a year earlier, and snack sales rose 1 percent, boosted by growth in markets such as India and China, which helped offset a 0.5 percent decline in its beverage business.

Coca-Cola, the world's leading beverage company and also PepsiCo's direct competitor, has been boosting its investment in China despite the financial crisis.

Last March, the company announced its three-year $2 billion China investment plan.