PepsiCo looks to grow in Latin America, Caribbean
Feb. 23, 2011
by Eric Schroeder
MEXICO CITY — PepsiCo, Inc. has joined the Inter-American Development Bank (I.D.B.), the largest multilateral provider of development financing for Latin America and the Caribbean, in a five-year partnership to spur social and economic growth in 26 countries across Latin America and the Caribbean.
As part of the partnership’s inaugural project, the groups have launched an agriculture initiative in Mexico geared toward expanding commercial sunflower production. The project is expected to create a sustainable market for sunflowers while providing loans and a source of income for 850 Mexican farmers and their families. PepsiCo said it plans to use the sunflowers as a source of heart-healthy high-oleic sunflower oil (HOSO) for cooking potato chips, biscuits, nuts and other snacks that are produced in Mexico under the Sabritas and Gamesa-Quaker brands.
“PepsiCo has a long history of doing business throughout Latin America and the Caribbean, and we’re proud to demonstrate our commitment to this vitally important region through our first-of-its-kind partnership with the I.D.B.,” said Indra Nooyi, chairman and chief executive officer of PepsiCo. “Our initiative to develop the Mexican sunflower market is a powerful example of how we can bring together the resources of public and private sectors to work together to deliver real value for local communities, for our consumers and for our business. We look forward to collaborating with the I.D.B. on a wide range of sustainable development projects across the region.”
Luis Alberto Moreno, president of the I.D.B., said the partnership with PepsiCo makes sense because of the company’s strong presence in Latin America and the Caribbean and because of a “shared view that investing in strategic social development initiatives will yield tangible economic benefits for a wide range of communities.”
As part of the sunflower production program, PepsiCo has committed to purchase 100% of the crop, for an estimated $52 million over seven years. Additionally, PepsiCo will invest $2.6 million to support management of the Mexican sunflower crop and will provide technical training to the small farmers. Financial partner Agrofinanzas, an institution specializing in supply chain finance, will make available $40.4 million for microloans to provide the farmers working capital. The I.D.B., through its Opportunities for the Majority Initiative, will provide Agrofinanzas a partial credit guarantee for up to $5 million.
Other aspects of the broader regional partnership will include collaboration to address a variety of issues in Latin America and the Caribbean, including water and sanitation, recycling, youth development, disaster relief and recovery, sustainable agriculture, nutrition and food security, and sharing knowledge and best practices about sustainability.