PepsiCo has announced plans to close a fruit juice production facility in the suburbs of Moscow, less than a year after Coca-Cola announced similar measures.
Last May, we announced that Coca-Cola was closing two of the four juice plants it operated in the country as it tried to optimise capacity in a shrinking market. Consumer demand in Russia is falling, as Western sanctions and falling oil prices threaten to send the country into its first recession since 2009.
Now, PepsiCo – Russia’s largest juice producer with 40% of the market – has revealed similar plans to split three production lines at the Ramenskoye plant between two existing facilities in the eastern city of Vladivostok and Lebedyansky, 200 miles south of Moscow.
It could represent significant losses for PepsiCo, who have invested heavily in Russia’s juice market in recent years, the Wall Street Journal claimed. In 2009, we reported that the company had invested more than $4bn in the market, including acquiring the leading branded juice maker Lebedyansky; this was followed by the $3.8bn acquisition of dairy and juice producer Wimm-Bill-Dann, which made it the largest food and beverage company in the region.
But the company’s “Russian revenue fell 10% to $4.41bn in 2014, hurt by the weaker ruble and a mid-single-digit percentage decline in beverage volumes,” the American newspaper said.
The closure follows the news earlier this month that beer maker Carlsberg was replacing its chief executive, after the Danish company made a number of investments in the Russian market that had since been affected by regulatory clampdown, an increase in taxes and a weakening of the local currency.
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