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PepsiCo suspends drink sales in Russia; supply of food “essentials” continues

PepsiCo said it will continue to supply daily essentials such as milk, baby formula and baby food.

By Simon Harvey

PepsiCo has suspended the sale of its major drinks brands in Russia but as a “humanitarian” gesture will continue to supply dairy products.

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What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
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Sales of Pepsi-Cola, 7Up and Miranda have stopped, along with the suspension of the company’s capital investment, advertising and promotional activities, chairman and CEO Ramon Laguarta confirmed, noting how the business has been operating in Russia for more than 60 years.

“Given the horrific events occurring in Ukraine we are announcing the suspension of the sale of Pepsi-Cola, and our global beverage brands in Russia, including 7Up and Mirinda,” Laguarta said.

He added: “As a food and beverage company, now more than ever we must stay true to the humanitarian aspect of our business. That means we have a responsibility to continue to offer our other products in Russia, including daily essentials such as milk and other dairy offerings, baby formula and baby food.”

PepsiCo has a dairy plant in Russia’s capital Moscow and a snacks facility in the town of Kashira, according to its 2020 annual report, which states revenue in the country amounted to US$3bn, compared to the $70.3bn group total. Sales in PepsiCo’s financial year ended on 25 December 2021 were $79.4bn with net income of $7.6bn.

Just Food is clarifying with PepsiCo whether it has any drinks facilities in Russia, and for further information on its operations in Ukraine.

“Our first priority continues to be the safety and security of our fellow Ukrainian associates,” Laguarta said. “We suspended operations in Ukraine to enable our associates to seek safety for themselves and their families, and our dedicated crisis teams in the sector and region continue to closely monitor developments in real-time.”

With respect to ongoing supply operations in Russia, the CEO explained: “By continuing to operate, we will also continue to support the livelihoods of our 20,000 Russian associates and the 40,000 Russian agricultural workers in our supply chain as they face significant challenges and uncertainty ahead.”

PepsiCo is also suppling aid to Ukrainian refugees who have fled to neighbouring countries, and is donating food, milk and refrigerators to relief organisations.

Production is also being increased at PepsiCo’s neighbouring food and drinks facilities “to meet the increased need”.

Laguarta added: “My heart goes out to all those who are caught in the middle of this deadly conflict. As it so often does, war is falling hardest on the innocent. War is never an answer, and we join all those calling for a speedy, peaceful resolution.”

For more on Just Food’s coverage on how the conflict is affecting the food industry, please visit our dedicated microsite.

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Free Report
img

What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.

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