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Suntory teams up with PepsiCo

Suntory teams up with PepsiCo

THURSDAY, November 02, 2017
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THE Asia-Pacific business of Japan’s Suntory and US-headquartered PepsiCo yesterday announced they are setting up a drinks joint venture in Thailand.

Suntory Beverage & Food Asia Pte Ltd, the Asia-Pacific operation of Tokyo-listed Suntory, and PepsiCo said the new joint venture would build on the latter’s strong position in Thailand and create new growth opportunities for both companies in the market. 
PepsiCo is one of the biggest players in Thailand's growing beverage market, and “the alliance is intended to combine the strengths of both companies in ways that are mutually beneficial to their businesses, customers and consumers”, Suntory said.
The joint venture also positions PepsiCo to continue expand its beverage portfolio to meet consumer demand for healthier options, and incorporate Suntory’s complementary brands and broad offerings.
Under the joint venture agreement, PepsiCo’s Thailand beverage business, operated International Refreshment (Thailand) Co Ltd (IRTC), will change its name to Suntory PepsiCo Beverage (Thailand) Co., Ltd. Suntory will become a 51 per cent shareholder, while PepsiCo will retain 49 per cent of the venture. Suntory and PepsiCo executives will hold key roles in the management of the joint venture, which will serve as the bottler for both companies in Thailand. Suntory and PepsiCo have an established record of working together in other markets, including the United States, Japan, Vietnam and New Zealand. 
Shekhar Mundlay, CEO for the beverage division at Suntory Beverage & Food Asia, said: “Suntory views Southeast Asia as a strategic priority, which we anticipate will continue to have high growth due to rapid urbanisation and a younger population relative to other regions. 
“Within this region, Thailand stands out as a high-potential, dynamic market. PepsiCo has already established a solid foundation with its portfolio of iconic brands, excellent manufacturing and distribution system, not to mention world-class workforce.”
Suntory has accelerated its global strategy and expanded its beverage and food business in Asia Pacific following the establishment of its regional headquarters in Singapore. Expansion into the beverage business in Thailand is a key part of Suntory's long-range plans. Suntory is also the owner of Brand’s in Thailand, which is one of the largest health supplements manufacturers and marketers locally and in the region. Additionally, Suntory has a strong portfolio of beverage brands including Lucozade, Ribena, CC Lemon, Tea+, Mytea, GoodMood and Mycafe.
Adel Garas, president of the PepsiCo Asia Pacific region, said: “Thailand is a critical and strategic market for PepsiCo in the Asia Pacific region. We have a long history in the country, going back to when Thai consumers got their first taste of Pepsi in 1952. To remain competitive and position ourselves to continue deliver sustainable, profitable, long-term growth, we must always ensure we have the right business model to meet the needs in a given market.”
In the five years from 2012, PepsiCo has invested hundreds of millions of US dollars in Thailand through its beverages and foods businesses, including two beverages and two foods manufacturing plants. PepsiCo invested in its first beverage plant in Thailand, in the Atata City Industrial Estate in Rayong province in 2012. In 2016, it opened a second beverage plant, in Nong Khae Industrial Estate in Saraburi province, with an aim to strengthen its growing beverage business in Thailand and support long-term portfolio expansion and diversification, doubling capacity of its first plant.

PepsiCo will retain marketing and innovation responsibilities for PepsiCo’s iconic beverage portfolio, so Thai consumers will still be able to enjoy their favorites -- including Pepsi-Cola, 7-UP, Mirinda, Gatorade, Lipton, and Aquafina.PepsiCo will continue to independently operate its foods business in Thailand. PepsiCo enjoys market leadership in Thailand’s snacks category with its Lay’s, Sunbites, and Tawan brands, and intends to maintain support for the local agriculture industry, and to invest in innovation and distribution to grow its foods business across the country.

This transaction is subject to the completion of legal processes.