Pepsi to Invest $250m in Vietnam

PepsiCo(PEP), the world’s second largest food and beverage business, announced that it plans to invest $250 million in Vietnam over the next three years — adding to the company’s investment over the past two years in two new manufacturing facilities, a new foods plant in Binh Duong and a new beverages plant in Can Tho.

“I am pleased to announce that over the next three years we expect to invest $250 million in our food and beverage businesses in Vietnam,” Saad Abdul-Latif, CEO of PepsiCo Asia, Middle East and Africa said in a prepared statement.

“Vietnam represents one of PepsiCo’s most exciting growth opportunities, and this investment is a reflection of our confidence in this dynamic country and the talented people who live and work here.”

The new investment will go towards a variety of projects, including increasing manufacturing capacity, adding marketplace equipment like coolers, further strengthening existing brands and broadening the company’s product portfolio, Pepsi said.

Pepsi offers the world’s largest portfolio of billion-dollar food and beverage brands, including 19 different product lines that each generates more than $1 billion in annual retail sales.

In addition to Vietnam’s consumer market potential, the country is also attracting more investments in the wake of rising labour costs in China. “The one-child policy started in the early 1980s and the decline in population growth is hitting factories,” ETF Action columnist and president and founder of Dion Money Management Don Dion wrote. “Wages are starting to climb as demand outstrips the supply of young workers. These younger workers are also more likely to strike or demand higher pay.”

On the other hand, “Vietnam’s population is much younger on average and this trend can continue for a decade.”

Last September, rival Coke(KO) said it was investing $200 million over the next three years in Vietnam in addition to the more than $200 million it had already invested in the country.

Coke said that Vietnam is a very important growth market for the company.

Shares of PepsiCo stock are down 0.6 percent to $65.17 Monday morning, while Coke is 0.3 percent lower to $55.57. – The Street

Tags: Pepsi Vietnam