) recently announced a massive expansion plan in Mexico worth $5
billion spanning the next 5 years.
The huge investment will be directed toward brand building and
expanding the range of food/beverage products, research &
development, ramping up the selling/delivery infrastructure,
expanding production capacity, growing the country's agricultural
programs and creating more jobs.
Pepsi has been investing aggressively in emerging and
developing markets in the recent years to capitalize on the
significant growth potential due to relatively low per-capita
consumption. Another reason is the burgeoning middle-class
population with rising income levels which in turn is increasing
the demand for convenience food and beverages. Pepsi is growing
in developing and emerging countries through tailored
distribution models as well as by offering locally-relevant
innovation and value-added products.
In addition to Mexico, Pepsi is expanding in other developing
and emerging countries like China, India, Brazil and Africa. In
November last year, Pepsi announced plans to spend $5.5 billion
for expansion in India by 2020. In Mexico, Pepsi has strengthened
its business through bottling consolidation deals and in China,
through a strategic partnership with Tingyi.
Developing and emerging markets accounted for 35% of Pepsi's
revenues in 2012. In fact, the company has tripled the revenues
generated from these markets in the past five years. Going
forward, management expects these markets to account for
two-third of the revenues.
Pepsi carries a Zacks Rank #3 (Hold). Better-ranked stocks in
the beverage sector include
The WhiteWave Foods Company
Monster Beverage Corporation
Coca-Cola HBC AG
). While WhiteWave Foods sports a Zacks Rank #1 (Strong Buy),
Monster Beverage and Coca-Cola HBC have a Zacks Rank #2
COCA COLA HELNC (CCH): Free Stock Analysis
MONSTER BEVERAG (MNST): Free Stock Analysis
PEPSICO INC (PEP): Free Stock Analysis Report
WHITEWAVE FOODS (WWAV): Free Stock Analysis
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