Dec 16, 2008

Business - PepsiCo CEO says it plans no more drink buyouts

NEW YORK: PepsiCo's CEO has said that the No. 2 US soft drink company plans no new acquisitions of North American drink manufacturers in the
current economic climate, but instead will focus resources on expanding markets for drinks it has developed on its own.

"I'd like us not to make any more beverage acquisitions, tuck-in type acquisitions," Chief Executive Indra Nooyi said yesterday at a Beverage Digest conference in New York. "I think our R&D pipeline is well-primed."

However, PepsiCo, which also owns the Frito-Lay snacks business, will consider acquisitions in the growing snacks sector, Nooyi said.

Purchase, New York-based PepsiCo Inc and other soft drink sellers have suffered from declining soda sales, and Morgan Stanley analyst Bill Pecoriello sees soda sales falling 6 per cent next year. Third-quarter sales growth at PepsiAmericas Beverages, which sells drinks in the U.S. and Latin America, was flat with a 2.5 per cent decline in the volume of drinks sold. Sales of carbonated soft drinks fell 3 per cent in North America while bottled water sales volume slid by double-digits as cash-strapped consumers switched to tap water.

But the PepsiAmericas Foods division, which includes the Doritos, Ruffles and Fritos chip brands among other snacks, reported a 12 per cent rise in revenue in the third quarter.

Prior to the economic slowdown, PepsiCo maintained a robust acquisitions strategy, buying drinks companies such as Izze, Naked Juice and a major juice maker in Russia. Earlier acquisitions brought the Tropicana, SoBe LifeWater and Gatorade brands to the company.

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