The press was all a flurry today announcing that Pepsi is opening their largest plant in Russia.
NEW YORK (AdAge.com) — With attention focused on President Barack Obama’s visit to Russia this week, PepsiCo made some news of its own in the country. Chairman-CEO Indra Nooyi announced a $1 billion investment in the country, making it the latest beverage battleground. PepsiCo, in partnership with the Pepsi Bottling Group, plans to expand its presence in the country over the next three years through a variety of manufacturing and distribution investments.
DOMODEDOVO, Russia, July 8 (Reuters) -Together with PBG, in which PepsiCo already owns 33 percent, the U.S. beverage giant inaugurated its new plant on Wednesday, planned to become its largest soft drink plant in the world, a $180 million facility south of Moscow in the town of Domodedovo.
The plant will produce Pepsi products for delivery to Russia and export to its former Soviet neighbours.
“Russia is vitally important to PepsiCo and to our partner, Pepsi Bottling Group. Together, we have invested billions of dollars here. Even more, we will continue to invest in Russia,” Nooyi told reporters.
As part of a delegation of U.S. company heads with interests in Russia, Nooyi accompanied U.S. President Barack Obama to Russia this week for his first summit since his inauguration, which helped warm political ties but brought little new trade.
Several U.S. business leaders called on Russia to improve rule of law and the two sides exchanged allegations of protectionism, but Nooyi said that Russia, until recently a booming consumer market, had been a hospitable place to work.
“I think Russia is extremely welcoming to foreign investors and does its utmost to get people speedy approvals to make investments happen,” Nooyi told the briefing on Wednesday.
We don’t find this surprising. But what we do find surprising is the comments to the article on Advertising Age. Commenters write
Am I the only one?
Maybe someone could help me understand why Pepsi doesn’t invest $1 billion into the US?
Foss says the investments they’re making in Russia are creating new jobs…for people in Russia?
And they’ve already invested $3 billion in Russia?
Someone please help me see the sense in the this article. Otherwise, I’m shocked and ashamed than no one else is distraught over this news.
Really? Do Americans live in a Bubble? Pepsi is a global company and US sales are only a fraction. For them to continue to grow and stay competitive, which in turn helps the entire global economy, they need to make smart tactical decisions. This is one of them. Our Director of Client Services, Maria, provided an excellent response to the article as well as the commenters concerns that Pepsi does not care about the American economy.
The so called “Cola Wars” have been on for a long time. About 70% of all Coke sales are actually outside Unites States, so is the majority of Pepsi’s sales. The US market is both saturated and stagnant. That’s why it’s imperative for these giants to fight for developing markets, including BRIC (Brazil, Russia, India, China), Latin America, Middle East and Africa, where per capita consumption is on the constant rise. This is the angle at which you should evalute Pepsi’s investment in Russia – it’s not because they care for creating Russian jobs over Americans. They need to aggressively expand in this market to sustain profit margins. Additionally, you cannot discount the political changes between Russia and the US, and how such investment would help several very influential groups. It is a global change – unfortunately, the cost of labor in the US is non-competitive, so you will see the continuation of the shift towards manufacturing abroad, while focusing in the US on providing intellectual services/management/etc.
I was a tad shocked at the reaction on an advertising news site. In a global economy, US Marketers need to pull out of their silos and understand how to expand their thinking for multinational brands.Reading the article on Reuters, WSJ and USA TODAY the comments were parallel to Maria’s, praising the decision and opportunity for economic growth for the brand.
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