PepsiCo has set up a juice and dairy joint venture with Saudi Arabian dairy firm Almarai Co., the US food and beverage giant revealed today (13 February).
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Speaking at the publication of PepsiCo’s 2008 results, Mike White, who doubles up as the company’s vice chairman and PepsiCo International CEO, said the deal was part of the US group’s aim to make its portfolio “increasingly focused on health and wellness”.
PepsiCo will own 52% of the venture, to be called International Dairy and Juice Ltd. White said the business would focus on markets in south-east Asia, Africa and parts of the Middle East.
“We’ll be able to draw on Almarai’s in-depth knowledge of the dairy industry, as well of course to draw on PepsiCo’s marketing capabilities and experience as a world leader in juice,” White said.
He acknowledged that the venture was in its “start-up phase” but said PepsiCo saw “exciting opportunities in growing categories that very directly address consumers’ interests in health and wellness in these emerging markets”.
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By GlobalDataEarlier today, PepsiCo reported that core operating profit in its Middle East, Asia and Africa markets jumped 24% in 2008 on the back of a 22% rise in revenues.
The company pointed to double-digit growth in its fourth-quarter snacks volumes in China, while its snacks business also enjoyed growth in South Africa and the Middle East. Snacks volumes in India, meanwhile, fell in the low-single digits due to a potato shortage.
White admitted that the global economic downturn might weigh on the growth of PepsiCo’s snacks business in 2009 but insisted that sales would continue to rise.
“I do think we are seeing challenges in many of these markets, we shouldn’t ignore that, but I continue to see growth in the snacks business and it’s pretty much across the board,” White said.
“I’m not in any way suggesting that we’re gong to see the kind of growth rates we saw in the first part of last year. But, frankly, I continue to see very good growth rates in all of these emerging markets and it looks pretty sustainable to me. Snacks are still a treat and we’ve re-engineered our single-serve products to stay within a good, attractive price point for consumers and we’ve got some good innovation for the year as well.”
