PepsiCo inks deal with large Japanese snacks maker

by Eric Schroeder
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TOKYO — PepsiCo, Inc. announced it will form a strategic alliance with Tokyo-based Calbee Foods Co., Ltd. to produce and sell a range of products in Japan, including potato chips, vegetable snacks, breakfast cereal and crackers. Calbee, with 5,000 employees and sales of approximately $1.3 billion, is the largest snack company in Japan.

As part of the agreement, PepsiCo will contribute to the alliance its Frito-Lay Japan business plus an undisclosed amount of cash, while Calbee will issue new stock to PepsiCo that will give the latter a 20% stake in the expanded company as well as a seat on the Calbee board of directors.

The combined business will generate annual revenues of approximately $1.4 billion and will operate a 13-plant manufacturing network. The business’s brands will include Kappa Ebisen prawn crackers, Calbee potato chips, Jagarico and Jagabee premium potato snacks, Doritos tortilla chips, Cheetos corn snacks and Mike popcorn. The company also will offer vegetable snacks and breakfast cereals.

"Calbee and PepsiCo share many qualities that will contribute to our mutual success, including our collective drive to satisfy consumer expectations and contribute to healthy lifestyles," said Indra Nooyi, chairman and chief executive officer for PepsiCo. "We at PepsiCo have long admired Calbee as a well-managed company that uses innovative technology in pursuit of purity and simplicity and makes every effort to maximize the nutritional value of its products. We’re delighted at the prospect of creating a market-leading company that will provide a broad range of foods to address the changing needs of consumers across Japan."

Yasuo Nakata, c.e.o. of Calbee, said the alliance represents a significant step forward in Calbee’s strategy to accelerate its top-line growth.

"We believe we have a huge opportunity to diversify our portfolio by offering products that reflect both Western and Japanese dietary cultures," Mr. Nakata said. "By sharing experience and expertise with PepsiCo, we can enhance the quality of our products and quickly seize attractive growth opportunities. We will continue to satisfy the needs and expectations of our customers around the world in their search for quality products to meet their changing lifestyle needs."

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