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PepsiCo suspends further investment at newly-opened Russian snacks plant

Work on the Novosibirsk snacks facility started in 2020 to be completed in stages.

By Simon Harvey

PepsiCo has suspended further investment at a recently-opened snacks plant in Russia.

Work began on the site in Novosibirsk, the main city of western Siberia, south-east of Moscow, in 2020 to produce PepsiCo’s Lay’s Crisps and HrusTeam crisp breads. At the time, the US-based food and beverage giant said two production lines would initially be put in place to come on stream at the end of last year, while a further two would be added in 2022-23.

Last week, PepsiCo announced it would halt sales in Russia of its Pepsi-Cola, 7Up and Miranda drinks brands in opposition to Vladimir Putin’s invasion of Ukraine, along with the suspension of capital investment, advertising and promotional activities. It is continuing to manufacture some food products. At the time, PepsiCo chairman and CEO Ramon Laguarta said the company has “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”.

Approached by Just Food to ascertain the status of the Novosibirsk plant, a PepsiCo spokesperson said: “PepsiCo is horrified by the tragic events in Ukraine. Last week, we announced we will be suspending our global beverage brands, Pepsi, 7Up and Miranda.

“We will also be suspending capital investments and all advertising and promotional activities in Russia. This includes future investment in our food plant in Novosibirsk. The plant became operational at the beginning of 2022, prior to hostilities. There is some work that we must complete legally but we will not be making any investments to expand the site as planned.”

When the plans for the Novosibirsk facility were revealed in 2020, with the expectation the project would create 900 jobs. According to its 2020 annual report, PepsiCo has a dairy plant in Russia’s capital Moscow and a snacks facility in the town of Kashira. The spokesperson refrained from providing more details on PepsiCo’s manufacturing set-up in Russia.

The 2020 annual report stated the company’s 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. The latest annual report has yet to be issued.

Laguarta noted in last week’s statement: “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.”

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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