PepsiCo has completed its a strategic beverage alliance in China with Tingyi (Cayman Islands) Holding, one of the leading food and beverage companies in China. China is projected to become the world’s largest beverage market by 2015. The alliance was approved by the shareholders of Tingyi in February and has now received regulatory approval.
As part of the alliance, Tingyi’s beverage subsidiary – Tingyi-Asahi Beverages Holding (TAB), one of the country’s leading beverage manufacturers – is now PepsiCo’s franchise bottler in China. TAB will partner with PepsiCo’s current bottlers to manufacture, sell and distribute PepsiCo’s carbonated soft drink and Gatorade brands. In addition, PepsiCo and TAB will begin co-branding their respective juice drink brands using the Tropicana brand name under license from PepsiCo. PepsiCo will retain branding and marketing responsibilities for these products.
Under the terms of the alliance, PepsiCo has contributed its indirect equity interests in its company-owned and joint venture bottling operations in China to TAB and received as consideration a 5% indirect equity interest in TAB. PepsiCo has an option to increase its indirect holding in TAB to 20% at its sole discretion by 2015. The shareholdings of PepsiCo’s existing Chinese joint venture partners in the joint venture bottling operations will not change as a result of the transaction.
“China will soon surpass the United Statesto become the largest beverage market in the world. As a result of this new alliance with Tingyi, PepsiCo is extremely well positioned for long-term growth in China,” says PepsiCo chairman and chief executive Indra Nooyi. “Tingyi is an outstanding operator with a proven track record of success. By leveraging the complementary strengths of each company, we’ll be able to significantly enhance our beverage business in China, reach millions of new consumers throughout the country, and create value for Tingyi and PepsiCo shareholders.”
This transaction involves the companies’ respective mainland China beverage operations. Both PepsiCo and Tingyi will continue to independently operate their respective food businesses.