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PepsiCo and Pepsi Bottling Group to Invest $1 Billion In Russia 50 Years After Russians Had Their First Taste of Pepsi-Cola

  7/6/2009
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Investments support new beverage, juice and snack infrastructure, including Domodedovo plant being inaugurated this week

MOSCOW, July 6 /PRNewswire-FirstCall/ -- PepsiCo, one of the world's largest food and beverage companies, announced today that it plans to invest US$1 billion in Russia over three years, together with its partner The Pepsi Bottling Group (PBG).

The investment will bring the cumulative investment in Russia by PepsiCo and PBG to over $4 billion and is consistent with PepsiCo's ongoing strategy to expand in emerging markets.

"I am delighted to announce that over three years we expect to invest $1 billion in our beverage and food businesses in Russia," said PepsiCo Chairman and Chief Executive Officer Indra Nooyi. "This investment reflects very clearly our great confidence in Russia and our long-term commitment to this very important market."

Nooyi is in Russia this week to open a new bottling plant outside Moscow, to join a meeting of business leaders convened by Presidents Medvedev and Obama and to mark 50 years since Pepsi-Cola was introduced in Moscow at the 1959 American National Exhibition.

The investment in Russia is funding various programs to expand manufacturing and distribution capacity. In addition to the new beverage facility opening this week in Domodedovo, a new snacks manufacturing plant is expected to open later this year in the southern city of Azov. PepsiCo and PBG also are planning significant investments to build a state-of-the-art warehousing and distribution infrastructure for the Lebedyansky juice business. And PepsiCo, the largest private user of potatoes grown in Russia, plans to continue its substantial investment in local agriculture, applying the latest technology to ensure the highest productivity and quality standards.

These investments continue a major expansion effort by PepsiCo and PBG that began in the late 1990s, with the opening of the companies' first beverage plant of the modern Russian era, followed by the opening of PepsiCo's first snack manufacturing facility in Kashira in 2002. In 2008, PepsiCo and PBG invested approximately $2 billion to acquire Lebedyansky, Russia's leading branded juice company.

"Russia is a very attractive growth market," said PBG Chairman and Chief Executive Officer Eric Foss. "The investments we're making in our Russia business are creating new jobs, providing us with the flexibility to produce a wider range of beverage offerings for consumers, and enabling us to better serve our valued retail partners. Our new plant in Domodedovo reflects our serious commitment to future expansion in Russia. We're looking forward to playing an active role in the country's business community for many years to come."

When operating at full capacity, the Domodedovo plant will be larger than any bottling plant currently in PepsiCo's global system. It will produce a range of beverage brands, including Pepsi-Cola, Aqua Minerale water and ready-to-drink Lipton Iced Teas (through PepsiCo's joint venture with Unilever) for sale by retailers across Russia as well as neighboring CIS countries.

The plant incorporates a number of water-saving and energy-saving features designed to reduce its environmental impact. It employs a state-of-the-art water filtration system that uses ozone molecules for purification. It is also the first PBG plant in Russia equipped to produce ultra-light PET plastic bottles on all bottling lines, with labeling technology that uses no glue, less plastic and less energy than traditional labels. In addition, the plant is designed to utilize energy-efficient lighting systems.

Promoting environmental sustainability is a key part of PepsiCo's "Performance with Purpose" commitment to achieve business and financial success while leaving a positive imprint on society. Consistent with this commitment, PepsiCo said it will also continue to actively support Russian communities through its wide-ranging agricultural program, with initiatives to educate local farmers and help them improve crop yields. Specific activities include grants to academic institutions to support agricultural innovation, and advanced training seminars to promote development-oriented farming among local growers who supply potatoes for Frito-Lay snacks.

50 Years of Pepsi in Russia

Pepsi's history in Russia began in 1959 when former PepsiCo Chairman and Chief Executive Officer Donald M. Kendall, then Pepsi-Cola International President, personally introduced Soviet Chairman Nikita Khrushchev to Pepsi-Cola at the historic American National Exhibition in Moscow. At that event, visitors sampled some three million cups of Pepsi. Many years later, Kendall reached a landmark barter agreement with the Soviet government, under which his company provided soft drink concentrate in exchange for Stolichnaya vodka. As a result, in 1974 Pepsi-Cola became the first Western consumer product to be made and sold in the Soviet Union with the opening of the initial franchise bottling plant in Novorossisk. Over the years Kendall has remained very active in promoting commercial relations between Russia and the U.S., and in 2004 then-President Vladimir Putin honored him with the Russian Federation's Order of Friendship at a Kremlin ceremony.

"We are particularly proud that we are marking 50 years since the introduction of Pepsi-Cola to Russian consumers," Nooyi said. "Today we are optimistic about the future of Russia, and we look forward to continuing to build our businesses here."

Today PepsiCo and PBG comprise one of the largest food and beverage providers in Russia, and are the leading producers of juices and nectars, ready-to-drink teas, bottled water and savory snacks across the country. In addition to popular carbonated soft drinks Pepsi, Mountain Dew and 7UP, PepsiCo and PBG together offer a broad portfolio of locally relevant brands that Russians know and love, including Ya, Tonus, Fruktovy Sad and Frustyle juices and nectars from Lebedyansky, and a variety of Frito-Lay snacks, such as Lay's Potato Chips made with potatoes from local farmers, and Hrusteam crispbreads.

Additional information about PepsiCo in Russia is available at www.pepsico.com/russia.

VIDEO B-ROLL, PHOTOS AVAILABLE

Broadcast-quality video b-roll, including historic material from 1959 and excerpts from a recent interview with Donald Kendall, is available to media for free download at http://www.thenewsmarket.com/pepsico.

For free registration, log on to: http://www.thenewsmarket.com.

About PBG

The Pepsi Bottling Group, Inc. (NYSE: PBG) is the world's largest manufacturer, seller and distributor of Pepsi-Cola beverages. With approximately 67,000 employees and annual sales of nearly $14 billion, PBG has operations in the U.S., Canada, Greece, Mexico, Russia, Spain and Turkey. PBG accounts for approximately 60 percent of the Pepsi-Cola beverages sold in North America, and approximately 40 percent of the Pepsi-Cola system volume worldwide. In Russia, PBG distributes Frito-Lay snacks in addition to its portfolio of leading beverage brands. PBG employs nearly 5,000 people in Russia. For more information, please visit www.pbg.com.

About PepsiCo

PepsiCo is one of the world's largest food and beverage companies, with 2008 annual revenues of more than $43 billion. The company employs approximately 198,000 people worldwide, and its products are sold in approximately 200 countries. Its principal businesses include: Frito-Lay snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and Quaker foods. The PepsiCo portfolio includes 18 brands that generate $1 billion or more each in annual retail sales. PepsiCo's commitment to sustainable growth, defined as Performance with Purpose, is focused on generating healthy financial returns while giving back to communities the company serves. This includes meeting consumer needs for a spectrum of convenient foods and beverages, reducing the company's impact on the environment through water, energy and packaging initiatives, and supporting its employees through a diverse and inclusive culture that recruits and retains world-class talent. PepsiCo is listed on the Dow Jones Sustainability North America Index and the Dow Jones Sustainability World Index. 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. For additional information on these and other factors that could cause PepsiCo's or PBG's actual results to materially differ from those set forth herein, please see PepsiCo's and PBG's respective filings with the United States Securities and Exchange Commission, including their most recent annual reports on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Neither PepsiCo nor PBG undertakes any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE: PepsiCo

Web site: http://www.pepsico.com/

SOURCE PepsiCo

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