With today’s announcement of our new snacks plant in the city of Wuhan – PepsiCo’s sixth food plant in Greater China – we’re opening the doors to growth in central and western China, a move that allows us to fuel the continued growth of products like Lay’s and Stax while supporting regional development with the creation of about 1,000 local jobs. Wuhan is PepsiCo’s first foods plant in China built to LEED standards, joining our three LEED Pepsi bottling plants as some of the most water and energy efficient facilities in the entire PepsiCo network. Applying the latest technology, the plant is expected to reduce energy consumption by 20% and water consumption by 30% compared to baseline plants – savings that simultaneously lower our operating costs. By using less water and energy, we’re producing potato chips in a way that’s good for China and good for PepsiCo, a model we follow in all 200 markets we operate in around the world.
Our foods business in China is one of the fastest-growing business units in all of PepsiCo, but there is still tremendous runway for growth. Lay’s is the leading potato chip brand in China, yet over 800million Chinese consumers have not yet tried the product. Through expanded distribution and focused brand-building, there’s enormous potential for millions of new Chinese consumers to fall in love with Lay’s and other PepsiCo products. We’re expanding into new regions without taking our eyes off the major cities, where we expect increased consumption behind broader penetration and frequency.
The opening of our Wuhan plant follows our recently completed alliance with Tingyi, which will accelerate national distribution of our beverage brands and create attractive new platforms for the growth of our beverage business moving forward. China is expected to become to the world’s largest liquid refreshment beverage market by 2015, and PepsiCo is in a great position to succeed. Our strength in both food and beverages gives PepsiCo a unique “Power of One” advantage in the marketplace that will enable us to deliver great value to consumers and to our retail customers.
Along with continuing to grow our food and beverage businesses, we’re scaling up our R&D operations to spur local innovation. We’re building a new R&D center and pilot plant in Shanghai to serve as a world-class innovation hub for Asia and bring great-tasting foods and beverages to the Chinese and Asian markets at an even faster pace. Every bag of chips we produce in China is sold right here in China and tailored to meet local tastes and preferences.
We’re also strengthening our agricultural capabilities to ensure a sustainable supply of the crops we need to make our products well into the future. PepsiCo is one of the largest independent users of potatoes in China, sourced from a variety of local contract growers and from our eight demonstration farms. To support the Wuhan plant, we established a potato farm in Xiangyang, Hubei in 2011 that uses drip irrigation, reducing water use up to 50% versus traditional methods and guaranteeing quality potato supply.
Our foods business in China is a sustainable model for the future, and the Wuhan plant is the latest shining example of Performance with Purpose – boosting local economic development, supporting local talent and farmers, and protecting the environment all while propelling PepsiCo’s growth in a market critical for global success.
Read the press release for details about the Wuhan foods plant opening.