PepsiCo plans to up China investment

By staff reporter

- Last updated on GMT

Related tags Soft drinks United states China

PepsiCo has announced it will invest another $850m in China over
the next three years in recognition of the country as a rapidly
emerging market for soft drinks and snack foods.

Pepsi, one of the first multinationals to move in to China, said its sales in the country had grown more than 25 per cent last year.

It told news agency Reuters​ that China could overtake Mexico within five years to become PepsiCo's biggest market outside the US.

Soft drinks have been a particularly strong growth area for the company, and market research group Datamonitor​ said carbonated soft drinks were now performing better, after years of losing out to the market dominance of tea.

New data from Canadean​, leading global beverage research company, reveals that China has expanded its share of the world's fizzy drinks market to more than 10 per cent since 1999.

The figures showed that many emerging markets, including Asia, Eastern Europe and Latin America, had propped up fizzy soft drink sales following consumer shifts to non-carbonated varieties in Western Europe and North America.

Datamonitor said in a report last year that China's soft drink market had grown by an average 12.8 per cent per year between 1998 and 2003. Coca-Cola was the market leader, with PepsiCo in second.

Consumption per person was expected to reach 20 litres in 2005, according to a 2002 market report by research group Rabobank​, though this remains only a fraction of consumption in the US.

Rabobank also warned that China's soft drinks industry was highly competitive, with more than 800 producers.

Multinationals like Coca-Cola and PepsiCo also face increasing competition from local players.

Datamonitor said last year that domestic drinks maker Jianlibao Beverage had moved up to third place on the market. And another local soft drinks firm, Wahaha, reportedly saw sales pass the $1bn mark in 2003.

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