Corporate News


Local Pepsi unit allots $75M for capex

Posted on January 27, 2012

PEPSI-COLA Products Philippines, Inc. is eyeing a $75-million capital expenditure (capex) this year to expand distribution of its beverage products as well as bankroll maintenance, an official told BusinessWorld this week.

PEPSI-COLA Products Philippines, Inc. plans to spend $75 million this year to grow its distribution network and also maintain plants. -- Jonathan L. Cellona
This, as the firm plans to surpass the projected 5-6% industry-wide sales growth for 2012, Pepsi-Cola Products Philippines President Partha Chakrabarti said.

“Our growth strategy will be the expansion of distribution network and the introduction of new products” Mr. Chakrabarti said.

“Half of the capex will go to the expansion of distribution such as the purchase of additional trucks and glass coolers,” he said, noting that other half will go to maintenance and capacity enhancement of its 11 plants nationwide.

The target is to have their products sold in more than half of the 900,000 stores in the country by year-end.

He said that the company, so far, has penetrated a little less than half of the 900,000 stores.

The company would be introducing new products this year to further drive profit and revenue growth, he added.

“We have the two largest partners: Lotte Chulsung Beverage Co. Ltd. and PepsiCo, Inc. With them, we have access to as much as many products we want,” he said.

Mr. Chakrabarti said the new products may be launched in the second quarter, which is the peak season for the beverage industry.

“We will be innovating at least half a dozen of our existing products,” he said. “We are looking at coffee, coconut water and milk soda beverages to add into our portfolio.”

The company recently forged an agreement with Peter Paul Philippines Corp., one of the largest exporters of coconut water in the country.

Mr. Chakrabari said the company would be introducing more non-carbonated products as the company is performing better in this segment.

Meanwhile, the drop in net income from January-September last year is estimated to have eased as of end-2011.

“We definitely performed better in the fourth quarter. You see, we have seen in improvement in the third quarter,” he said.

Net income of the company for January to September 2011 plunged by 49% to P225.83 million from yearago levels as performance in the first half was dragged down by high sugar prices.

The company, however, started to record recovery in the third quarter of 2011, posting P118.18-million net income, up by 3.63% from P114.04 million in the same quarter the previous year.

This, according to him, would lead the company to expect for a better year as sugar prices has been reportedly stabilized.

“Our single largest component which account 30% of our value chain is going to be lower by 40%,” he said.

The beverage industry is also upbeat for 2012 with government spending seen to rise this year.

“[And] no matter how the economy is performing in Europe, our products cost P5 or P6 pesos per bottle and that is something which is relatively recession-proof,” he said.

Shares of Pepsi-Cola Products Philippines rose by 0.45% to P2.25 apiece yesterday.