PepsiCo opens its first Quaker Oats factory in China

PepsiCo Inc, one of the world's leading food and beverage companies, opened its first Quaker Oats plant in China on Thursday in an effort to expand its nutritional business in the country, as carbonated-drink sales continue slowing.

Located in the Daxing district of Beijing, the new 200 million yuan ($31.25 million) facility covers 30,000 square meters of production space and has been equipped to produce 50,000 tons of produce annually.

Around 150 new jobs will be created at the site itself, and thousands indirectly in the surrounding community, said officials. The plant will manufacture a variety of Quaker products, including Instant Oats, Quick Cooked Oats, and Quaker's Cereal Powder Drink. Quaker has been owned by PepsiCo since 2001.

The range was aimed at satisfying a growing demand in China for a more balanced diet.

"Profitable companies in the 21st century will be those that align the needs of their business with the needs of the world around them," said PepsiCo Chairman and CEO Indra Nooyi.

She claimed that for more than 30 years, PepsiCo's investments in China had strengthened its business globally, and contributed to the country's development.

The new opening came less than two months after the launch of Quaker High Fiber Oats Dairy Drink in China, the company's first foray into the segment.

The product was developed at PepsiCo's R & D center in Shanghai, which opened in 2012 to become its largest innovation hub outside the United States.

Drinks industry analysts suggest PepsiCo is likely to continue increasing its investment in non-carbonated soft drinks, and diversify its portfolio toward more healthy products.

According to recent data from market research firm Kantar Worldpanel, China's carbonated soft drinks market fell by 3 percent in value last year to 7.3 billion yuan, while demand for so-called functional drinks－which include juices, premium packaged water and yogurt－grew by 11 percent, from 4.7 billion yuan in 2013 to 5.2 billion yuan.

Figures from Euromonitor International show that Coca-Cola Inc held a 63.3 percent share of the Chinese carbonated drinks market in 2014, followed by PepsiCo Inc (29 percent) and Hangzhou Wahaha Group Co Ltd (2.3 percent). Pepsico's share in 2010 was 31.1 percent.

After forming a tie-up with leading Chinese food and beverage company Tingyi Holding Group in 2012, PepsiCo now claims the alliance is the country's biggest "liquid refreshment" producer, with a combined 100 production plants.