PepsiCo says to invest $5.5 billion in India by 2020

By Aditi Shah

(Reuters) - PepsiCo Inc, the maker of Pepsi-Cola, Frito-Lay snacks and Tropicana juice, plans to invest $5.5 billion in India by 2020 to expand its presence in the country, it said on Monday.

PepsiCo's plans come after rival Coca-Cola Co , the world's largest drinks maker, said in June last year it would invest a total of $5 billion between 2012 and 2020 to grow its business in Asia's third-largest economy.

PepsiCo and Coca-Cola's investments, driven by a growing middle class with higher disposable incomes, are likely to be welcomed by Indian officials who are trying to restore foreign investor confidence after growth has fallen to a decade-low.

 

"India is a country with huge potential and it remains an attractive, high-priority market for PepsiCo," Chief Executive Officer Indra Nooyi said in a statement.

"We've built a highly successful business in India over the course of many years and we believe we've only scratched the surface of the long-term growth opportunities that exist for PepsiCo and our partners," said Indian-born Nooyi on a visit to the country.

PepsiCo and its partners plan to invest in expanding their product range, doubling production capacity and improving their sales and distribution network, especially in rural markets, the company said.

The company has 38 bottling plants and three food plants in India, according to its website, and generates more than 10 billion rupees in annual sales from eight products including Pepsi and Frito-Lay potato chips, it said.

PepsiCo saw volumes in its snack business in Asia, the Middle East and Europe rise 4 percent in the July-September quarter, led by double-digit growth in China, Pakistan and Turkey. On the drinks side, volume rose 7 percent.

India is trying to attract more foreign investments by opening up various sectors including retail and telecoms in a bid to narrow its current account deficit.

Separately Britain's biggest clothing retailer Marks & Spencer on Monday opened its largest store in India in Mumbai, while Unilever said in April said it would raise its stake in Hindustan Unilever to as much as 75 percent from 52 percent.

However, India has also had some high-profile departures as the government has been seeing as struggling to pass reforms. India's economy also slowed to a decade low of 5 percent in the fiscal year through March, while inflation has been accelerating.

In October BHP Billiton Ltd surrendered almost all its oil and gas blocks in the country, citing an inability to carry out exploration operations.

(Editing by David Holmes)