As U.S. sales stall, PepsiCo Inc. is looking abroad to boost profits. Thursday, the Purchase, N.Y.-based beverage giant said it would
invest up to $3 billion in Mexico -- where it has more than 40,000 employees -- over the next several years. Two billion dollars will go to R&D, manufacturing and distribution, marketing and advertising for the food business, with the rest going to marketing and advertising for the beverage system there. Just three weeks ago, Pepsi announced it was investing $1 billion in the beverage and food businesses
in China over four years.
All this comes as the company said it was cutting 3,300 jobs after
reporting a 10% drop in net income in the third quarter on Oct. 14. CEO Indra Nooyi, recently
touted as a "woman to watch" by the WSJ, had said, "We were adversely impacted by continued weakness in the U.S. liquid refreshment beverage category, which resulted in disappointing performance in our domestic beverage business." On the flip side, its international snack-food business rose 4% and international beverage volume was up 11%.
Pepsi has really been committed to its markets outside the U.S., and you can see, its not just by their plans for Mexico and China, but by all the dealmaking they have done this year:
- Jan. 8 -- acquires Penelopa, Bulgaria's leading producer and seller of branded nuts and seeds,
- Apr. 30 -- buys V Water, a leading vitamin water brand in the U.K.,
- Aug. 28 -- completes $1.4 billion deal for majority stake in Russian juice leader and
- Oct. 29 -- purchases Spitz International Inc., the leading maker of sunflower and pumpkin seeds in Canada.
Struggling Pepsi is keen on its American market. In March, it formed a joint venture with Strauss Group to operate Sabra, a top-selling maker of hummus. That deal is a part of a larger focus on healthier foods and lifestyles -- the basis of chief Nooyi's "Performance With Purpose" philosophy.
One report noted Massimo d'Amore, CEO of PepsiCo Americas Beverages, told investors on Thursday at a conference in New York that the company wants to
engage consumers in the brands, much like it does with Mountain Dew, and win them back through product innovation. -
Baz HiralalPepsiCo invests $3 billion in Mexico
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