Atlanta, GA 7/6/2009 9:48:27 PM
News / Business

PepsiCo (NYSE: PEP), Pepsi Bottling Group (NYSE: PBG) Invest $1B in Russia

PepsiCo Inc. (NYSE: PEP) has teamed up with Pepsi Bottling Group Inc. (NYSE: PBG), its largest bottling company, to invest $1 billion in Russia, according to reports Monday.


The billion dollar investment will be over three years and will serve as a new focus to enter new markets as the domestic economy stifles.


PepsiCo said the move is part of a long-term strategy to expand in emerging markets and brings the total investment by PepsiCo and Pepsi Bottling Group Inc. in Russia above $4 billion.


"This investment reflects very clearly our great confidence in Russia and our long-term commitment to this very important market," said Indra Nooyi, chairman and chief executive of the Purchase, New York-based maker of Pepsi, Gatorade and Tropicana drinks and Frito-Lay snacks.


The companies plan to increase manufacturing and distribution capacity in Russia, according to Associated Press.


PepsiCo is also opening a new beverage facility this week in Domodedovo and a snacks plant in Azov later this year. The Domodedovo plant will produce Pepsi-Cola and other beverages and will be PepsiCo's largest bottling plant worldwide.


PepsiCo’s news is the latest in a string of international investments over the past couple of months.


Last November, PepsiCo said it would invest $1 billion in China over the next four years to expand its manufacturing capability, research and development and sales force in the country. The move marked its largest investment in China in nearly 30 years.


Later that month, PepsiCo said it would invest up to $3 billion in Mexico in the next five years, including $2 billion on manufacturing, marketing and research and development for its food businesses and $1 billion on marketing and advertising for Pepsi's beverages.


It also announced it struck a deal to buy 20 percent of Japan's largest snack company, Calbee Foods, and earlier, another deal to buy a Jordanian dairy company, Teeba, through a joint venture with Saudi-based dairy company Almarai.


PepsiCo is the world's second-biggest maker of soft drinks behind The Coca-Cola Company (NYSE: KO), with sales in about 200 countries. PepsiCo earned $43.25 billion in revenue in 2008.


Pepsi Bottling Group, based in Somers, New York, is the world's largest manufacturer, seller and distributor of Pepsi-Cola beverages and has operations in the U.S., Canada, Greece, Mexico, Russia, Spain and Turkey.


The pairing comes as PepsiCo is trying to buy out Pepsi Bottling Group and its other major bottler, PepsiAmericas, Inc. (NYSE: PAS). PepsiCo first offered $6 billion in April to buy out the two bottlers, saying owning them would help it operate more efficiently.


Both bottling companies rejected the deal, saying the beverage conglomerate undervalued them.


Shares in PepsiCo stock have risen 56 cents (0.99%) to $56.91 in morning trading. Pepsi Bottling Group stock rose 22 cents (0.64%) to $34.02.




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