PepsiCo, Tingyi finalize beverage alliance in China

by Eric Schroeder
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PURCHASE, N.Y. — PepsiCo, Inc. and Tingyi (Cayman Islands) Holding Corp., a food and beverage company based in Tianjin, China, officially have formed a beverage alliance in China.

The alliance, which was announced in November 2011 and approved by the shareholders of Tingyi in February, received regulatory approval on March 29.

As part of the alliance, Tingyi’s beverage subsidiary — Tingyi-Asahi Beverages (TAB) Holding Co. Ltd. — is now PepsiCo’s franchise bottler in China. TAB will partner with PepsiCo’s current bottlers to manufacture, sell and distribute PepsiCo’s carbonated soft drink and Gatorade brands. In addition, PepsiCo and TAB will begin co-branding their respective juice drink brands using the Tropicana brand name under license from PepsiCo. PepsiCo will retain branding and marketing responsibilities for these products.

PepsiCo said it has contributed its indirect equity interests in its company-owned and joint venture bottling operations in China to TAB and received as consideration a 5% indirect equity interest in TAB.

Additionally, PepsiCo has an option to increase its indirect holding in TAB to 20% at its sole discretion by 2015.

The PepsiCo-Tingyi beverage system will provide some of China’s most popular beverage products, including, Pepsi, Mirinda, Gatorade and China’s top-selling tea and water brands, sold under TAB’s Master Kong brand name.

“China will soon surpass the United States to become the largest beverage market in the world,” said Indra Nooyi, chairman and chief executive officer of PepsiCo. “As a result of this new alliance with Tingyi, PepsiCo is extremely well positioned for long-term growth in China. Tingyi is an outstanding operator with a proven track record of success. By leveraging the complementary strengths of each company, we’ll be able to significantly enhance our beverage business in China, reach millions of new consumers throughout the country, and create value for Tingyi and PepsiCo shareholders.”

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