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February 18, 2010

CAGNY: PepsiCo targets Russia for growth

Snack and beverage giant PepsiCo has targeted Russia as a “window of opportunity” for growth and said it now has plans to “step up several gears” in the country.

Snack and beverage giant PepsiCo has targeted Russia as a “window of opportunity” for growth and said it now has plans to “step up several gears” in the country.

Speaking to analysts at the CAGNY conference in Florida today (18 February), Zein Abdalla, CEO of PepsiCo Europe, said that the company is focused on expanding its operations from top to bottom in the market.

PepsiCo is investing in developing its production and logistics capabilities in Russia, as well as building brands and growing its portfolio, he revealed.

“The best is truly yet to come. We have built the largest food and beverage company from a multi-national perspective, but we believe that really is just the beginning. There is a window of opportunity now to build a defining consumer goods company in Russia, not just by building brands and portfolios but by fleshing out the backbone across the business system in Russia and a truly advantaged business model,” Abdalla said.

Abdalla emphasised that while PepsiCo formerly relied on importing ingredients for its Russian snack production, the company is now 90% self-sufficient in producing ingredients.

This, Abdalla said, was “just the starting point” and PepsiCo will now look to capitalise on its ability to source and manufacture goods locally.

He added that PepsiCo sees “opportunities” for snack and beverage growth in Russia, but that expansion will need to be carried out in a disciplined fashion.

“There are areas where we want to go with snack and beverage separated and there are areas where we want to go jointly, so building a very clear and well articulated plan region by region is critical to underpin a good execution. That is what we are working our way through. We are putting in a common systems agenda across the business,” Abdalla told analysts.

He conceded that 2010 will be “a challenging year” for PepsiCo’s Russian operations, but added that if disposable incomes start to grow, the firm is “confident” of being able to build growth in Russia.

Last week, PepsiCo reported a 16% increase in full-year profits, driven by gains in its worldwide snack and international beverage businesses.

In 2009, PepsiCo earned US$5.95bn, compared to $5.14bn in 2008. However, revenue remained flat at $43.23bn.

The firm also announced plans to build on its “global leadership” in “macro” snacks in 2010 through acquisitions and the development of healthier products.

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