Coke vs. Pepsi Spills Over to Russia

Sept. 26, 2011
A new Coca-Cola plant is the latest move in the bubbling competition with PepsiCo. in Russia.

World beverage leader Coca-Cola on Monday announced the launch of its largest plant in Russia in a move aimed at countering the growing influence in the region of its U.S. rival PepsiCo.

The shiny new $120 million plant in the southern city of Rostov-on-Don will supply fizzy drinks to the tens of thousands of fans who converge on the nearby city of Sochi for the 2014 Winter Olympic Games.

"Today's plant opening once again highlights our intention to put long-term investments in place within the Russian economy," Coca-Cola CEO Muhtar Kent said at the opening ceremony.

"We believe that the Russian market, the Russian consumer, the Russian economy is going to grow, is going to be a dynamic -- a very dynamic -- environment," he said.

The company said it plans to invest about $3 billion in the Russian economy in the next three years as its seeks to counter PepsiCo's growing influence in the ex-Soviet states.

PepsiCo earlier this year acquired a two-thirds stake in Russia's second-largest food and beverage company, Wimm-Bill-Dann, for $3.8 billion.

The investment by Coca-Cola's main rival was PepsiCo's largest outside the United States and underscored its commitment to a market it first penetrated in 1973.

Coca-Cola's counter-move Monday was its second major foreign initiative in a week after a $4 billion investment project unveiled for the surging Chinese market.

Rivalry Plays Into Russia's Hand

This stiff competition between the world's two big bottlers folds nicely into the Russian government's plans to boost stalling regional growth.

Russia has sought to attract foreign direct investments as it tries to kick-start a modernization drive intended to wean the country off its dependence on energy revenues.

PepsiCo has worked its way into the Wimm-Bill-Dann deal by investing some $3 billion in Russia over the past decade. It plans to pour another $1 billion into Wimm-Bill-Dann by the end of the year.

Coca-Cola said its investments in Rostov will be made between next year and 2016. The plant will be able produce some 450 million liters of drinks and juices per year once fully operational.

The global giant initially broke into the market in 1990 just a year before the fall of the Soviet Union and now employs about 18,000 people at its Russian bottling plants.

Local officials have highlighted the latest plant as an example of the investments generated by the ability of Prime Minister Vladimir Putin -- expected to return to the presidency next year -- to bring the Olympic Games to Russia against long odds.

"The construction of this new plant demonstrates that the Sochi 2014 Winter Olympic and Paralympic Games have become a catalyst for economic development in southern Russia," said the Games' organizing committee chief Dmitry Chernyshenko.

Copyright Agence France-Presse, 2011

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