PepsiCo is teaming up with a Chinese partner to build a Quaker oats production facility in the Asian country.
The US-headquartered food and drinks giant has inked what it called a “strategic cooperation” agreement with Jiangsu Rilong Food Co. to invest around 500 million yuan ($68.9m) in the new plant.
Situated in Lianshui County, Huai'an City in Jiangsu province north of Shanghai, the factory will cover an area of 100,000 square metres. It will have a manufacturing capacity of 160,000 tons of the breakfast cereal brand, according to a statement from PepsiCo.
Production is due to kick off later this year, with the plant operated by Jiangsu Rilong Food.
Just Food has asked PepsiCo to clarify its business relationship with the Chinese company.
Chen Jiancong, the chairman of Jiangsu Rilong Food, said in the statement: “Rilong has more than 20 years of experience in oatmeal processing and production. The pursuit of excellence in quality has made Rilong and PepsiCo, which shares the same ideals, become long-term partners.”
PepsiCo said the investment and partnership is geared toward developing China’s local food industry, particularly around better-for-you linked to health, improving production efficiencies, and to meet the “diversified needs for nutritious cereal foods”.
The venture will seek to reduce fats, salt and sugar, while eliminating added monosodium glutamate (MSG), sweeteners, gelatine and artificial flavourings.
In 2022, as part of its health agenda, PepsiCo said it jointly established the China Nutrition Society-Pepsi Nutrition Innovation Center in partnership with the Chinese Nutrition Society.
Changan Xie, the CEO of PepsiCo for the Asia-Pacific region, added: “PepsiCo has been deeply involved in the Chinese market for more than 40 years and has always adhered to the long-term commitment of rooted in China.
“This strategic cooperation is an important part of PepsiCo's active support for the 'Healthy China' strategy, focusing on the innovative development of healthy food…It is also another example of PepsiCo's continued optimism about the Chinese market, deepening its layout in China, and actively seizing new opportunities from China's high-level opening up."
PepsiCo already operates a “convenient food” plant in China, located in Shanghai, according to its 2023 annual report, which said the Asia Pacific, including Australia, New Zealand and China, accounted for 5% of group revenue across both food and drinks.
China itself generated $2.7bn of PepsiCo’s group-wide revenue of $91.4bn for 2023, with low single-digit growth in food and a mid-single-digit progression in beverages, the report shows.
Financial figures for PepsiCo’s 2024 fiscal year – to 28 December – are due to be published on 4 February.
