Food and drinks giant PepsiCo has used the CAGNY investment conference in Florida to emphasise the benefits of its acquisition of Russian dairy business Wimm-Bill-Dann, with one executive labelling the deal a “slam dunk”.
PepsiCo secured its acquisition of a majority stake in WBD earlier this month and, speaking at CAGNY yesterday (24 February), Zein Abdalla, president of the company’s European business, said the deal “ticked” four boxes – category growth, the potential of the market, brands and the ability to “add value” to the business.
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“Dairy is a tremendous category in terms of its global growth; in value-added dairy, grains etc….you’re into double-digit growth,” Abdalla said. “Russia is clearly an emerging market with very high growth potential but it is also a gateway to 400m consumers when you look at the republics around it and the other European countries.”
A third benefit Abdalla highlighted was WBD’s “wonderful brands, fantastic manufacturing facilities and a tremendous innovation pipeline”. He said: “We are going to learn a hell of a lot from this business in terms of the way it runs.”
He also said that PepsiCo would be able to “add value” and also explained that the acquistition would give the company “an innovation pipeline” that it can take into emerging markets.
“Normally when you get excited about an acquisition you tick two out of all of those four. We are ticking all four …that is when we use phrases like home run, slam dunk, so yes we are very excited about it,” he said.
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By GlobalDataThe WBD acquisition will broaden PepsiCo’s exposure to developing markets. Chairman and CEO Indra Nooyi told CAGNY that, in five years, PepsiCo’s sales in emerging markets had risen from 21% of total revenue to 31%.
Turning to PepsiCo’s business in North America, Nooyi said the company would “convert” more of its snack products to natural ingredients in 2011.
She added that the company will also make all of its products more relevant to “a broad array of ethnic consumers” with products like Doritos Tapatio, as well as expand the Stacy’s line from pita chips to include pita crisps, crostinis and flat bread, and expand the Sabra line from hummus to include fresh dips and spreads.
