PepsiCo Inc. will invest $1 billion in China over the next four years, one of its fastest-growing and more important markets, as the company pushes to keep Coca-Cola Inc. from overtaking it in soda market share.
The plan entails expanding manufacturing capacity and local research-and- development facilities as well as building a sales force and spending on marketing efforts.
China is a key beachhead for Pepsi, which last year held a narrow market-share lead over Coke in the country’s carbonated-beverage segment. Globally, Coke has more than double Pepsi’s market share, so forestalling the company in the world’s most-populous country is important to Pepsi.
In the past two years, Coke also has had the benefit of being tied to Beijing’s Summer Olympics, which Coke has hoped it can use momentum from to overtake Pepsi in China.
The decision to invest in China comes at a time when Pepsi is struggling domestically. Last month, Pepsi reported its third-quarter net income was down 9.6%, and the company cut its full-year earnings forecast. But international operations continue to perform well, and the company has been giving particular focus to them, although the recently strengthened U.S. dollar will trim some overseas profits.
The China spending follows previously announced plans to spend $500 million in India and to make acquisitions in locales such as Russia.