Pepsi to Enter U.S. Dairy Market
07/09/2012| 11:15am US/Eastern
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PepsiCo Inc. (>> PepsiCo, Inc.) has agreed to a joint venture with German dairy company Theo Muller Group to introduce new yogurt products to the U.S., marking the food and beverage company's entry into the U.S. dairy market as it looks to capitalize on growing consumer demand for dairy products.
"As we've seen through the success of our dairy business in other parts of the world, this is a category with strong growth prospects," said Pepsi Chief Scientific Officer Mehmood Khan.
The soft-drink company said the joint venture will combine its brand recognition, reach, and research and development capabilities with Theo Muller's dairy expertise. This will also be a first entry into the U.S. dairy market for Theo Muller, which is Germany's largest privately held dairy business.
The Muller Corner, Muller Greek Corner and Muller FrutUp brands of yogurt will be sold at supermarkets and club retailers in 17 markets in the Northeast and mid-Atlantic region starting this summer.
The company said the joint venture is building a new manufacturing plant in Batavia, N.Y., which, once completed in 2013, is expected to create more than 180 new jobs in upstate New York.
Pepsi already has a stake in the global dairy products business. The company acquired Wimm-Bill-Dann, Russia's largest dairy company, in 2011 and has been part of a joint venture with Almarai, Saudi Arabia's largest dairy company, since 2009.
Monday, Pepsi reiterated its previously stated goal of growing its global nutrition portfolio to $30 billion in revenue by 2020 and highlighted 2011 Euromonitor data saying that globally the dairy category is expected to grow more than any other through 2016.
In April, the food and beverages company reported that its first-quarter earnings fell 1.4% on higher costs as revenue growth slowed and sales from Americas beverages continued to slide. The company has seen increased sales over the past two years, helped by acquisitions and growth in emerging markets, but its bottom line has been stung by higher commodity costs.
Pepsi's shares were down 7 cents to $70.15 in recent trading. The stock is up 7% in the last three months.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
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