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PepsiCo to Invest Additional $2.5B in China
Associated Press
May 21, 2010
NEW YORK (AP) — PepsiCo Inc. said Friday that it plans to invest an
additional $2.5 billion in China in the next three years on new plants
and research facilities as the food and beverage maker builds up its
presence in the growing market.
The company made the announcement in a news release Friday from Shanghai,
site of the Shanghai Expo, where PepsiCo is a sponsor of the USA Pavilion.
That planned spending is in addition to the $1 billion investment
it announced in 2008 and plans to complete this year.
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. The company, based
in Purchase, N.Y., posted double-digit gains in sales of snacks and
beverages in India and China.
But competition is fierce. PepsiCo, whose brands include Tropicana
and Gatorade, has pledged to invest more in its international business
as it fights stagnation at home and in Europe. Rival Coca-Cola Co.
plans to do the same in these high growth markets.
Money from 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, juices and other
drinks 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.
The company will research and develop new products just for the Asian
market. It already offers drinks inspired by traditional Chinese medicine
and Lay's potato chips in flavors tailored just to the market, including
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," CEO Indra
Nooyi said.
The company currently runs 27 beverage and food plants and five farms
in China, and has more than 20,000 employees there.
Shares in premarket trading Friday fell 76 cents to $63.10.
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