Daily Newsletter

31 August 2023

Daily Newsletter

31 August 2023

PepsiCo announces return to snack production in Indonesia

The Lay's crisps maker has broken ground on a new manufacturing facility in Cikarang.

Andy Coyne August 31 2023

US snacks and beverages giant PepsiCo is planning to return to manufacturing snacks in Indonesia two years after ending a joint venture in the country.

PepsiCo has broken ground on a new production facility in the town of Cikarang, West Java. The company said it has an estimated long-term commitment of $200m to “develop the Indonesian market”.

The snack major's decision to return was also smoothed by investment incentives provided by the Indonesian government.

It quit its snacks joint venture in Indonesia in early 2021, selling the minority stake to local partner PT Indofood CBP Sukses Makmur. PepsiCo did not provide a reason for its exit from the venture.

The partnership had produced the snack brands Lay's, Cheetos and Doritos for the local market but under the terms of the sale agreement with its JV partner, PepsiCo and its affiliates agreed not to manufacture, package, sell, market or distribute any competing snack food products in Indonesia for three years.

PepsiCo said it anticipates it will start producing snacks at the new facility by early 2025, a year after that agreed period of inactivity.

The US company said its new facility “underscores a broader vision: prioritising local talent, harnessing local raw materials and strengthening the domestic value chain".

It added: “With its rapidly expanding economy, dynamic demographic profile and evolving consumer needs, Indonesia presents unparalleled opportunities, particularly in the F&B sector.

“Recognising this potential, the Indonesian government has shaped policies to cultivate a vibrant investment climate. Aligning with this favourable landscape, PepsiCo Indonesia has reaffirmed its long-term investment commitment to the country.”

PepsiCo has pledged to source most raw materials for its snacks, including corn and palm oil, from sustainable sources and to use renewable power sources.

Once ready, the new West Java manufacturing plant will span 60,000 sq m, dedicated to the production of snacks.

Asif Mobin, CEO of PepsiCo Indonesia, said: "In Indonesia, our expansion signifies more than growth - it represents our commitment to the country, its sustainability objectives, and the communities we serve.”

Could the consumer industry be bolstered by the increased use of AI

The consumer goods, foodservice, and packaging sectors are undergoing digital transformation, accelerated by the COVID-19 pandemic and changing consumer preferences. Data science and ML are strong investments across all areas. For the most part, these sectors will not play a significant role in creating and developing AI hardware or platforms, but will instead help scale up the adoption of AI technologies, such as CV, conversational platforms, and smart robots.

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