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PEPSICO ANNOUNCES LARGEST-EVER DEAL FOR MANUFACTURED EXPORTS FROM UKRAINE

 PEPSICO ANNOUNCES LARGEST-EVER DEAL
 FOR MANUFACTURED EXPORTS FROM UKRAINE
 NEW WESTERN-UKRAINIAN JOINT VENTURE TO MARKET
 COMMERCIAL SHIPS VALUED AT U.S.$1 BILLION
 PEPSI SOFT DRINKS TO TRIPLE AND 100 PIZZA HUTS TO OPEN
 LONDON, Oct. 22 /PRNewswire/ -- PepsiCo, Inc. (NYSE: PEP), today announced it has signed an agreement with two Ukrainian partners and independently-owned Fram Shipping, Ltd., to establish a joint venture to market U.S.$1 billion worth of Ukraine-built commercial shipping vessels over the next eight years.
 The deal marks PepsiCo's first joint venture in the market, and is the largest ever signed between Western and Ukrainian interests for the export of manufactured products from the newly sovereign republic.
 The deal represents a dramatic departure from PepsiCo's past reciprocal trade agreements because it innovatively pools a broad spectrum of shipping, soft drinks and food service interests under a single, operating enterprise, called Ukrainian Development Corporation.
 It also paves the way to more than triple Pepsi soft drink volume in Ukraine and establish up to 100 Pizza Hut restaurants in the market through foreign exchange credits generated from ship sales.
 A signing ceremony held here was attended by senior representatives of the joint-venture partners: PepsiCo; Zaliv Shipyard, a leading Ukrainian shipyard located in Kerch, Crimea; Ukrpivo (The Ukrainian Branch Company for the Production of Beer, Soft Drinks and Mineral Waters), a national beverage concern; and Fram Shipping, Ltd., an independently-owned shipping company with interests in over 40 vessels.
 "This new agreement will help tap PepsiCo's enormous growth potential in Ukraine," said Donald M. Kendall, retired chief executive officer of PepsiCo and long-time architect of the company's business in the former Soviet Union. "It will shift PepsiCo's leadership momentum gained over 20 years to an even higher gear."
 Kendall added: "Each day, Ukraine moves closer towards breaking down barriers to democracy and building up bridges to free enterprise. This joint venture symbolizes the opportunities available now in Ukraine to western companies which have the eye to spot opportunity, the heart to make commitments, and the foresight to invest for the long term."
 The joint venture, which will maintain an office in Kiev, will market to international buyers all commercial vessels produced at the Zaliv Shipyard. The first three ships to be marketed under the new agreement are 68,000 dead weight ton (dwt) capacity, double-hull, double-bottom product tankers. Zaliv was the first shipyard in the former Soviet Union with the technology to manufacture double-hull, double-bottom ships, an increasing requirement for ships entering many international ports.
 The joint venture will also participate in a comprehensive program to fully modernize the commercial sector of the Zaliv Shipyard, making it the first ship-building facility to do so since the dissolution of the former Soviet Union. The program will include major investments in training, state-of-the-art manufacturing equipment, design technology and transfer of modern management practices.
 Another area which the joint venture will facilitate is the conversion of portions of the Zaliv Shipyard for new commercial manufacturing ventures. One such project under consideration is the building of pre-fabricated Pizza Hut units for export or use within Ukraine.
 Today's announcement won praise from Ukraine's chairman of the State Committee for the Foodstuff and Food Processing Industry, Nikolay P. Kulinich, who said: "By every measure, this is a landmark agreement. It shows what can be accomplished when the strengths of Ukrainian and western enterprises are creatively combined in true partnership."
 New Bottling Plants
 On the soft drink front, the agreement will advance by 300 percent Pepsi soft drink sales in Ukraine. Pepsi-Cola International, PepsiCo's international soft drink division, will rapidly upgrade and expand its operations, increasing the number of Pepsi plants from today's seven to at least 12 over the next two years. Additional investments are also slated for sales and distribution infrastructure, new product and packaging development, and aggressive marketing activities.
 Pepsi will also assist Ukraine's national beverage concern Ukrpivo in facilitating strategic investments in local support industries such as glass bottle production, crown and closure manufacturing, and label and packaging material production. Such investments are expected to modernize and upgrade production technology, thereby improving product quality and expanding production capacity for the benefit of the entire industry.
 "With its large consumer base, low per capita consumption and commitment to economic development, Ukraine is one of Pepsi's most significant investment opportunities in the former Soviet Union," said F. David Jones, president of Pepsi-Cola International's Middle East/Africa/Eastern Europe Division. "This agreement is one of many moves in our long-term strategy to expand Pepsi soft drink leadership."
 Ukrainians drink about 10 liters (40 eight-ounce servings) of carbonated soft drinks per year, or about one-fifth as much as their U.S. counterparts. In the developing Ukraine market, Pepsi sells all it produces, or approximately 240 million servings each year. The company estimates that by the end of this century total retail sales of all soft drinks in the Ukrainian market will reach over U.S.$200 billion.
 Excluding Russia, Ukraine is Pepsi's largest market in the former Soviet Union. Pepsi outsells the nearest foreign brand by 3 to 1 and was the first western consumer product sold in the market.
 Entry of Pizza Hut Restaurants
 Under the terms of the agreement, a portion of the foreign exchange proceeds from vessel sales will also be used to support Pizza Hut's entry into Ukraine. Plans call for the building of up to 100 Pizza Hut restaurants with supporting infrastructure in the country's fledgling food processing and distribution industry.
 "We're excited by the opportunity to work with the Ukrainian people to establish Pizza Hut outlets in the country and are delighted to be a part of this innovative joint venture," said David Williams, senior vice president of Pizza Hut International's Europe, Africa and Middle East Division.
 Pizza Hut currently operates two restaurants in Moscow through a joint venture established in 1990 with the Moscow City Council. Both restaurants quickly reached western levels of food quality and service, setting new standards for the former Soviet Union and breaking sales records for the entire Pizza Hut system.
 "Our goal is no less than ambitious. We want to duplicate the Moscow success on a much larger scale, with a Pizza Hut in every major city in Ukraine," said Williams. "Whenever a consumer reaches for a Pepsi, we want him or her to have the opportunity to reach for a Pizza Hut pizza too."
 Williams said that Pizza Hut's initial plans will focus on developing an extensive network of food suppliers and upgrading food processing standards, particularly in the dairy and meat industry. Other development efforts include working with manufacturers to upgrade restaurant equipment and setting up an efficient distribution system for food storage and delivery.
 "Over time, we see this joint venture assisting local suppliers to develop packaged food products which can compete on the world market," noted Williams.
 The first Pizza Hut restaurants will open in the first half of 1993. Once an experienced management staff, infrastructure and Ukrainian- specific menus have been developed at the initial outlets, additional restaurants will be established at a greatly accelerated pace.
 -0- 10/22/92
 /CONTACT: Ken Ross of Pepsi-Cola International, 914-767-6894; or Anna Nerbovig, in London, (44-71) 481-2575, ext. 601, or in Cyprus, (357-2) 331-222, for Pepsi/
 (PEP) CO: PepsiCo, Inc.; Fram Shipping, Ltd.; Zaliv Shipyard; Ukrpivo ST: New York IN: FOD LEI MAR SU: JVN


GK -- NY029 -- 3363 10/22/92 09:29 EDT
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