By Surojit Chatterjee: Subscribe to Surojit's RSS feed
May 21, 2010 7:30 PM EDT
World's biggest maker of snacks and non-alcoholic beverages PepsiCo Inc (PEP) said, Friday, it will invest $2.5 billion in China over the next three years to tap its booming economy.
"This investment reflects very clearly our great confidence in China and our long-term commitment to this very important, growing market," PepsiCo CEO Indra Nooyi said in a statement.
"We look forward to continuing to evolve our business in China and offer Chinese consumers a full portfolio of foods and beverages," Nooyi, who is in Shanghai to attend the World Expo, said. "China is a vibrant market and has decades of growth ahead of it."
The company said the money will be invested towards expanding its manufacturing facilities, ramping up their agricultural operations and brand building initiatives, among other things. The company already operates five farms throughout China and plans to invest in agricultural development, opening five new farms for potatoes and oats. PepsiCo plans to open 10-12 new snack and drink manufacturing plants in China as well as install new production lines at existing facilities and expand their research and development (R&D) center so that they can launch new products tailored for the Asian market. The company already offers drinks inspired by traditional Chinese medicine and Lay's potato chips in flavors such as cool cucumber and crispy prawn.
"We are building expertise and infrastructure now so that we can have a strong, sustainable manufacturing and agricultural base to serve the diverse and growing needs of consumers across China," Nooyi, who is credited with successfully adding brands like Tropicana, Quaker Oats and Gatorade to PepsiCo's portfolio, said.
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PepsiCo, best known for its world famous carbonated beverage Pepsi Cola, competes with Coca-Cola Co. (KO) and Dr. Pepper Snapple group Inc (DPS) in high growth markets such as China and India.
The company announced a $1 billion investment plan in 2008, which will be executed this year. Last year, rival Coca-Cola said it was investing $2 billion in China over three years to firm its presence in the world's largest consumer market.
At 3.29pm (EDT), shares of NYSE-listed PepsiCo, which employs over 20,000 people in China, was trading 1.58 percent down at $62.85.
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