Blog: Dean BestAll eyes on Russia - just don't mention the football

Dean Best | 2 December 2010

Today (2 December), Russia grabbed the headlines on the business and sport pages - but we won't mention the competition to host the 2018 World Cup.

While England lost the race to host the world's second-largest sports event in eight years time to Russia, a group of our trans-Atlantic cousins looks set to become top dog behind the Iron Curtain. In the food and beverage space, at least.

PepsiCo is set to become Russia's largest food and drink manufacturer after agreeing to buy a majority stake in dairy, juice and baby food group Wimm-Bill-Dann.

The US company will pay US$3.8bn to acquire 66% of Wimm-Bill-Dann and then move to buy the rest of the business. The deal values Russia's largest dairy business at $5.4bn.

It is a significant move for PepsiCo. Russia becomes its largest market outside the US and PepsiCo strengthens its position in a market that is attractive to foreign companies - not least to the likes of Coca-Cola Co. in drinks and Danone in dairy.

PepsiCo CFO Hugh Johnston put the deal in a similar bracket to the deal that created the business back in 1965 - the merger between Pepsi-Cola and snack maker Lay's.

Johnston also said PepsiCo plans more acquisitions as it targets growing its sales of healthier food and beverages from US$10bn to $30bn by 2020.

How will the likes of Coke, Danone react?


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