China is PepsiCo's top priority market due to its rapid growth, company executive says; PepsiCo expects China to contribute to its global growth year-over-year
BOAO, HAINAN PROVINCE, China
April 11, 2014
– China is PepsiCo's top priority market in the world due to its rapid growth, said Sanjeev Chadha, chief executive officer of PepsiCo Asia, Middle East and Africa.
China is already the company's second-largest market in beverages in the world, right behind the United States, and the local snacks business is one of the fastest growing for the multinational.
Both of PepsiCo's snacks and beverage businesses grew by double digits in 2013.
"China is a very powerful growth engine for us. I really see China's contribution to PepsiCo's global growth increasing year-on-year," said Chadha at the annual conference of Boao Forum for Asia in Hainan province on Wednesday.
Although China's economic growth rate has come down to what it was a couple of years back, he believes it is still a healthy and robust growth.
"We are very confident of the steps the Chinese government is taking in terms of making it a lot more balanced and consumer-based economy," he said.
"At the 7.5 percent GDP growth rate, China is still the largest contributor to global growth and it will definitely be the critical driver for PepsiCo's global growth."
PepsiCo has invested more than $2 billion in China and remained committed to its investment in the country. The company opened a food plant in Wuhan, Hubei province, in 2012 and will open a new plant for the Quaker brand in Beijing in October.
In 2012, the company also opened an Asia R&D Center in Shanghai, its largest outside the US.
Chadha stressed that local relevance is a crucial factor because food is very close to culture.
He said Chinese consumers today are very globally aware, which means his company needs to deliver products that are world class. But they are also very locally affiliated in tastes and desires.
"What I look forward to with our Asia R&D Center is creating innovation in China not only for China - then exporting it to other parts of the world," he said.
In 2012, PepsiCo and Tingyi (Cayman Islands) Holding Corp, one of the nation's leading food and beverage companies, completed their transaction to create a strategic beverage alliance.
Combined with Tingyi, PepsiCo now boasts the No 1 liquid refreshment beverage system in China.
The partnership not only brings the best of PepsiCo's brands and R&D capabilities but also the best of Tingyi's reach and cost-efficient operations.
"In today's world, no one organization, however good they might be, can do everything by itself. It has to leverage the relative strengths of different organizations to come together for the betterment of the people in China," Chadha said.
PepsiCo has focused on building brands that are truly trusted by consumers for food safety and quality. The company is partnering with the Chinese government and industry associations to enable clear and stringent regulations.
"From a food safety standpoint, it is very important for the government to set clear and high standard regulatory guidelines. It's equally important that the governance of those guidelines is equally strong," he said.
He added that policies need to encourage sustainable development and encourage organizations that contribute to the sustainable development of the country, especially from an environmental standpoint.