PepsiCo to Invest $2.5 Billion in China Over Next Three Years

Investment to support new manufacturing facilities, increased research and development capabilities, expanded agricultural efforts and brand-building initiatives

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PepsiCo

May 21, 2010, 05:39 ET

SHANGHAI, May 21 /PRNewswire-FirstCall/ -- PepsiCo, one of the world's largest food and beverage companies, today announced that it plans to invest an additional US$2.5 billion in China over the next three years. The newly announced investment is in addition to the US$1 billion investment the company announced in 2008, which will be completed this year.

"I am delighted to announce that over the next three years we expect to invest $2.5 billion in our food and beverage businesses in China," said PepsiCo Chairman and Chief Executive Officer Indra Nooyi, who is in Shanghai to visit the Shanghai Expo, where PepsiCo is a sponsor of the USA Pavilion. "This investment reflects very clearly our great confidence in China and our long-term commitment to this very important, growing market. We look forward to continuing to evolve our business in China and offer Chinese consumers a full portfolio of foods and beverages ranging from soft drinks and juices to oatmeal and savory snacks."

The new investment will be allocated to a variety of projects, including new manufacturing facilities, a significant scaling up of the company's research and development operations, expanded agricultural development and brand-building initiatives.

PepsiCo plans to open 10-12 new plants in China to manufacture soft drinks, non-carbonated beverages and snacks and will install additional production lines in existing facilities. Consistent with the company's strategy to expand in interior and western China, PepsiCo will open plants in the provinces of Fujian, Gansu, Henan and Yunnan in the next two years. All new plants will meet LEED standards for environmental design, following the model of the company's Chongqing beverage plant, which opened last year. That plant - the first "green" beverage plant ever built in China and the first of its kind to receive LEED certification - uses 22% less water and 23% less energy than the average PepsiCo plant in China.

PepsiCo also plans to broaden its portfolio of Chinese-designed and developed products as it works to provide more food and beverage choices made with wholesome ingredients that contribute to healthier eating and drinking. Current beverage offerings include Tropicana Guo Bin Fen juices and Cao Ben Le drinks, which are inspired by traditional Chinese medicine. On the food side, the company offers Quaker oat cereal in local flavors and Lay's potato chips in flavors designed specifically for the Chinese market, such as cool cucumber and crispy prawn. In order to accelerate expansion of its product portfolio, PepsiCo will build a world-class research and development center in China to develop products for all of Asia.

As one of the largest growers of potatoes in China, PepsiCo also plans to invest in agricultural development. It will open five new farms for potatoes and oats, bringing advanced irrigation technology to each. PepsiCo has already established a number of successful farms in China, including its pilot farm in Baotou, Inner Mongolia, where the company introduced advanced irrigation technologies to transform desert into fertile potato farmland.

"We are building expertise and infrastructure now so that we can have a strong, sustainable manufacturing and agricultural base to serve the diverse and growing needs of consumers across China," Nooyi said.

PepsiCo currently operates 27 beverage and food plants and five farms throughout China and employs more than 20,000 people in the country.

About PepsiCo

PepsiCo offers the world's largest portfolio of billion-dollar food and beverage brands, including 19 different product lines that each generates more than $1 billion in annual retail sales. Our main businesses - Frito-Lay, Quaker, Pepsi-Cola, Tropicana and Gatorade - also make hundreds of other nourishing, tasty foods and drinks that bring joy to our consumers in more than 200 countries. With annualized revenues of nearly $60 billion, PepsiCo's people are united by our unique commitment to sustainable growth, called Performance with Purpose. By dedicating ourselves to offering a broad array of choices for healthy, convenient and fun nourishment, reducing our environmental impact, and fostering a diverse and inclusive workplace culture, PepsiCo balances strong financial returns with giving back to our communities worldwide. For more information, please visit www.pepsico.com.

Cautionary Statement

Statements in this release that are "forward-looking statements" are based on currently available information, operating plans and projections about future events and trends. They inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in demand for PepsiCo's products, as a result of changes in consumer preferences and tastes or otherwise; damage to PepsiCo's reputation; trade consolidation, the loss of any key customer, or failure to maintain good relationships with PepsiCo's bottling partners; PepsiCo's ability to hire or retain key employees or a highly skilled and diverse workforce; unstable political conditions, civil unrest or other developments and risks in the countries where PepsiCo operates; changes in the legal and regulatory environment; PepsiCo's ability to build and sustain proper information technology infrastructure, successfully implement its ongoing business process transformation initiative or outsource certain functions effectively; unfavorable economic conditions and increased volatility in foreign exchange rates; PepsiCo's ability to compete effectively; increased costs, disruption of supply or shortages of raw materials and other supplies; disruption of PepsiCo's supply chain; climate change or changes in legal, regulatory or market measures to address climate change; PepsiCo's ability to realize the anticipated cost savings and other benefits expected from the mergers with The Pepsi Bottling Group, Inc. and PepsiAmericas, Inc.; failure to renew collective bargaining agreements or strikes or work stoppages; and any downgrade of PepsiCo's credit rating resulting in an increase of its future borrowing costs.

For additional information on these and other factors that could cause PepsiCo's actual results to materially differ from those set forth herein, please see PepsiCo's filings with the SEC, including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. PepsiCo undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE PepsiCo