PepsiCo has once again highlighted the opportunity for revenue growth presented by emerging markets such as China.
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The maker of Frito-Lay snacks said today (8 October) that sales at its Asia, Middle East and Africa (AMEA) businesses rose 13% during the third quarter, driving a 52% improvement in operating profit.
AMEA snack volumes grew 8%, more than double the level of volume expansion seen in the previous quarter, the company said.
Speaking during a conference call with analysts, PepsiCo CEO and chairman Indra Nooyi said that emerging markets such as China still represented a good opportunity for growth, despite the constriction of consumer spending witnessed as a result of the global recession.
“Consumer spending will go up in China because the government are encouraging it and we feel very bullish about China going into 2010,” Nooyi insisted.
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By GlobalDataPepsiCo is a year into its four-year US$1bn investment plan in China, where it is focusing on the development of locally-relevant innovation, expanding its manufacturing capacity, increasing its sales force with an eye to expanding distribution and funding brand-building initiatives.
“China, for us represents the biggest opportunity, the biggest learning opportunity,” she commented.
Nooyi said that PepsiCo must continue to “adapt” its business model to meet the needs of Chinese consumers.
The Chinese market presents PepsiCo with a number of important “learning opportunities”, especially in the field of innovation, she added. According to Nooyi, companies operating in the Chinese market lead the way in the speed that innovations are implemented and are quick to borrow innovation from other markets.
While Nooyi highlighted the competitive nature of the Chinese snack market, she said that the fact that there is little local competition in the potato chip sector allowed the company to achieve “good pricing” for its products.
