Pepsi gets juiced
PepsiCo recently announced the acquisition of controlling interest in Russia's leading juice producer, Lebedyansky. The deal is for $1.4 billion.
The move gives Pepsi a 30% share in the Russian juice market. It is the #6 juice producer in the world. It also makes bottled water and baby food, but these divisions will be spun off.
This is a growth opportunity for Pepsi. With the Russian economy growing, Bloomberg News reports that juice sales in Russia rose by over 70% over the past few years, and Lebedyansky has quadrupled its sales in the last year. That contrast with US operations, which show little growth. It also is part of a larger move to non-carbonated beverages.
One of the keys to the deal is a strong distribution network across Russia, a network that will help boost Pepsi's soda sales. Pepsi had already announced serious investment in building a major new soda plant in Russia, where it competes with Coca-Cola. Coca-Cola, by the way, is the #2 juice producer in Russia.
The deal, according to BusinessWeek online analyst Jason Bush (3.20/08) "It's easily the largest investment ever in Russia's food and drinks segment, and also one of the largest ever Russian acquisitions by a U.S. company."
In fact, Pepsi has made several juice buys in Eastern Europe recently, most notably in 2007, buying the largest juice company in Ukraine.
