Kamis, 27 November 2008

Pepsi plan investing up to $3B in Mexico

MILWAUKEE - PepsiCo Inc. said Thursday it plans to invest up to $3 billion in Mexico in the next five years to grow its beverages and food brands Sabritas and Gamesa there.

The Purchase, N.Y.-based maker of Frito-Lay's and Pepsi said it will spend $2 billion on manufacturing, marketing and research and development for its food businesses.

PepsiCo Americas Foods Chief Executive Officer John C. Compton told company executives at an event in Mexico City that the company will spend the remaining $1 billion on marketing and advertising for Pepsi's beverages in the country.

Mexico is considered a key market for the company, Compton said in a news release, and PepsiCo has been there for the last century.

“PepsiCo's businesses in Mexico have developed great consumer loyalty to their brands, built through decades of investment,” Compton said.

The company has 60 production centers, 22 manufacturing plants and 667 distribution centers there. With 40,000 employees in Mexico, PepsiCo is among the country's largest employers.

Compton said as part of its investment in Mexico, it will introduce some of its key brands there to the U.S., where Hispanic populations are rising.

The investment follows news earlier this month that the beverage and snack maker will invest $1 billion in China over the next four years. Its goals there are similar to the Mexican venture in that it wants to expand its manufacturing capability, research and development and sales force in the country. The move marks the company's largest investment in China in nearly 30 years.

The company is expanding its presence abroad as it faces a slumping soft drink market in the U.S.

PepsiCo earlier this month reported a nearly 10 percent drop in third-quarter profit, missing Wall Street expectations. The company, which has focused on growing market share in quickly growing markets of Brazil, India, Russia and China, said at the time it would cut 3,300 jobs and close six plants to combat weak U.S. drink sales and a surging dollar, which will hurt profits from its rapidly growing international business.

In the U.S. market, the company is noticing its penetration stays high but consumers are drinking its soft drinks less as they change their habits for health reasons or to save money, Massimo d'Amore, Chief Executive Officer of PepsiCo Americas Beverages, told investors on Thursday. He told investors at a conference in New York the company wants to engage consumers in the brands, much like it does with Mountain Dew, and win them back through product innovation.

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