PepsiCo and PBG: to invest one billion USD in Russia

Moscow / RU. (pco) PepsiCo Inc., one of the world´s largest food and beverage companies, announced that it plans to invest one billion USD in Russia over three years, together with its partner The Pepsi Bottling Group (PBG). The investment will bring the cumulative investment in Russia by PepsiCo and PBG to over four billion USD and is consistent with PepsiCo´s ongoing strategy to expand in emerging markets. «I am delighted to announce that over three years we expect to invest one billion USD in our beverage and food businesses in Russia», said PepsiCo Chairman and Chief Executive Officer Indra Nooyi. «This investment reflects very clearly our great confidence in Russia and our long-term commitment to this very important market».

Nooyi is in Russia this week to open a new bottling plant outside Moscow, to join a meeting of business leaders convened by Presidents Medvedev and Obama and to mark 50 years since Pepsi-Cola was introduced in Moscow at the 1959 American National Exhibition.

The investment in Russia is funding various programs to expand manufacturing and distribution capacity. In addition to the new beverage facility opening this week in Domodedovo, a new snacks manufacturing plant is expected to open later this year in the southern city of Azov. PepsiCo and PBG also are planning significant investments to build a state-of-the-art warehousing and distribution infrastructure for the Lebedyansky juice business. And PepsiCo, the largest private user of potatoes grown in Russia, plans to continue its substantial investment in local agriculture, applying the latest technology to ensure the highest productivity and quality standards.

These investments continue a major expansion effort by PepsiCo and PBG that began in the late 1990s, with the opening of the companies´ first beverage plant of the modern Russian era, followed by the opening of PepsiCo´s first snack manufacturing facility in Kashira in 2002. In 2008, PepsiCo and PBG invested approximately two billion USD to acquire Lebedyansky, Russia´s leading branded juice company.

«Russia is a very attractive growth market», said PBG Chairman and Chief Executive Officer Eric Foss. «The investments we are making in our Russia business are creating new jobs, providing us with the flexibility to produce a wider range of beverage offerings for consumers, and enabling us to better serve our valued retail partners. Our new plant in Domodedovo reflects our serious commitment to future expansion in Russia. We are looking forward to playing an active role in the country´s business community for many years to come».

When operating at full capacity, the Domodedovo plant will be larger than any bottling plant currently in PepsiCo´s global system. It will produce a range of beverage brands, including Pepsi-Cola, Aqua Minerale water and ready-to-drink Lipton Iced Teas (through PepsiCo´s joint venture with Unilever) for sale by retailers across Russia as well as neighboring CIS countries.

The plant incorporates a number of water-saving and energy-saving features designed to reduce its environmental impact. It employs a state-of-the-art water filtration system that uses ozone molecules for purification. It is also the first PBG plant in Russia equipped to produce ultra-light PET plastic bottles on all bottling lines, with labeling technology that uses no glue, less plastic and less energy than traditional labels. In addition, the plant is designed to utilize energy-efficient lighting systems.

Promoting environmental sustainability is a key part of PepsiCo´s «Performance with Purpose» commitment to achieve business and financial success while leaving a positive imprint on society. Consistent with this commitment, PepsiCo said it will also continue to actively support Russian communities through its wide-ranging agricultural program, with initiatives to educate local farmers and help them improve crop yields. Specific activities include grants to academic institutions to support agricultural innovation, and advanced training seminars to promote development-oriented farming among local growers who supply potatoes for Frito-Lay snacks.

50 Years of Pepsi in Russia

Pepsi´s history in Russia began in 1959 when former PepsiCo Chairman and Chief Executive Officer Donald M. Kendall, then Pepsi-Cola International President, personally introduced Soviet Chairman Nikita Khrushchev to Pepsi-Cola at the historic American National Exhibition in Moscow. At that event, visitors sampled some three million cups of Pepsi. Many years later, Kendall reached a landmark barter agreement with the Soviet government, under which his company provided soft drink concentrate in exchange for Stolichnaya vodka. As a result, in 1974 Pepsi-Cola became the first Western consumer product to be made and sold in the Soviet Union with the opening of the initial franchise bottling plant in Novorossisk. Over the years Kendall has remained very active in promoting commercial relations between Russia and the United States, and in 2004 then-President Vladimir Putin honored him with the Russian Federation´s Order of Friendship at a Kremlin ceremony.

«We are particularly proud that we are marking 50 years since the introduction of Pepsi-Cola to Russian consumers», Nooyi said. «Today we are optimistic about the future of Russia, and we look forward to continuing to build our businesses here».

Today PepsiCo and PBG comprise one of the largest food and beverage providers in Russia, and are the leading producers of juices and nectars, ready-to-drink teas, bottled water and savory snacks across the country. In addition to popular carbonated soft drinks Pepsi, Mountain Dew and 7UP, PepsiCo and PBG together offer a broad portfolio of locally relevant brands that Russians know and love, including Ya, Tonus, Fruktovy Sad and Frustyle juices and nectars from Lebedyansky, and a variety of Frito-Lay snacks, such as Lay´s Potato Chips made with potatoes from local farmers, and Hrusteam crispbreads.

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