PepsiCo decides to completely cease production operations in Russia

RUSSIA – PepsiCo has decided to completely stop production of Pepsi, 7UP, and Mountain Dew in Russia, nearly six months after the beverage giant announced the suspension of sales and production of its products in the country.

In a statement to Reuters, the American company said it is selling the last stocks of PepsiCo products, made back in July-August from the remnants of concentrates needed for production.

“Over time, all of its concentrates in Russia were exhausted, and production ceased,” PepsiCo’s spokesman said.

At the same time, the company’s representative did not comment on the sale of drinks in stores and whether they were discontinued, however, according to a Reuter’s survey, sodas are still widely available in Moscow, as well as Vladivostok in the Far East and Krasnoyarsk in Siberia.

The company noted that the decision, which has now been announced, “is consistent with the statement that was made in March 2022” when PepsiCo announced that it was suspending the sale of drinks in Russia, as well as advertising activities but production continued until August 2022.

PepsiCo, in March, said it would continue to sell FMCG products in Russia, such as milk and other dairy products, infant formula, and baby food.

The company has been operating in Russia for more than 60 years, and its circles were one of the few Western products allowed in the Soviet Union before its collapse.

Local manufacturers increase capacity to meet surging demand

Meanwhile, Russian drinks producer Ochakovo said it had increased the annual bottling capacity of its CoolCola, Fancy, and Street soft drinks by 2.5 times to try and plug the gap in the market left by exiting Western brands.

Ochakovo, which produces beer, juices, and carbonated soft drinks similar to Coke, Fanta, and Sprite, said it had increased its bottling capacity to 125 million decalitres a year from 50 million, to meet the surging demand occasioned by the disappearance of western drinks, leaving local manufacturers to step in.

Rival Chernogolovka is aiming for a 50% share of Russia’s nearly US$9 billion soft drinks market now that Coca-Cola has reduced operations, its CEO told Reuters this month. The company started making Cola Chernogolovka in May.

Newly launched cola brands, including Ochakovo and Chernogolovka, jumped to a 5% share of sales in the category in the first half of 2022, NielsenIQ Russia said.

Coca-Cola HBC AG, one of Coca-Cola’s many bottlers worldwide, recently announced it took a one-time hit of 190 million euros ($193 million) in the first half from costs related to its Russian business after it stopped selling Coke and other products in Russia.

Western companies with iconic brands like Coca-Cola that exit Russia faces years of battling knockoffs and unauthorized imports clamoring to fill the void they leave behind, as well as courts with little sympathy for firms that depart.

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