Focus - CAGNY 2010: PepsiCo eyes Russia for growth
Russia will come good - PepsiCo exec
Snack and beverage giant PepsiCo has targeted Russia as a “window of opportunity” for growth and said it now has plans to “step up several gears” in the country.
Speaking to analysts at the CAGNY conference in Florida today (18 February), Zein Abdalla, CEO of PepsiCo Europe, said that while it was more than 90% self-sufficient in Russia, this was “just the starting point”.
“The best is truly yet to come. We have built the largest food and beverage company from a multi-national perspective, but we believe that really is just the beginning. There is a window of opportunity now to build a defining consumer goods company in Russia, not just by building brands and portfolios but by fleshing out the backbone across the business system in Russia and a truly advantaged business model,” Abdalla said.
He added that PepsiCo sees “opportunities” for snack and beverage growth in Russia, but it will need to be done in a “planful” way.
Abdalla did not appear deterred by Russia's weak economy, which was hit harder than most in 2009 by the flight of foreign investment and fall in oil price as a result of the global economic downturn.
“There are areas where we want to go with snack and beverage separated and there are areas where we want to go jointly, so building a very clear and well articulated plan region by region is critical to underpin a good execution. That is what we are working our way through. We are putting in a common systems agenda across the business,” Abdalla told analysts.
He conceded that 2010 will be “a challenging year”, but added that if disposable incomes start to grow, the firm is “confident” of being able to build growth in Russia.
The firm today refiled for regulatory clearance to take full control of PepsiAmericas and Pepsi Bottling Group, after the bottlers' shareholders backed the plan in a vote.
PepsiCo hopes to complete the deal by the end of February 2010.
Abdalla told analysts that the acquisition is “transformational” for PepsiCo in terms of how it sets up its categories to “really attack” growth opportunities.
“What is really powerful about this is that it brings in a lot of businesses with strong operating entities in the Eastern European and faster growing emerging markets. It is transformation from a scale point of view as well.”
Abdalla said the acquisition now steps the firm up to a US$9bn business that has a “significantly expanded” portfolio across Europe, a “significantly expanded” infrastructure in terms of a balance between East and West, it gives it “a whole new platform in terms of unleashing Power of One”.
“What it also allows us to do is build a unified and aligned system where we can call the priorities quickly and we can align around the decisions we want to make faster,” he added.
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