How PepsiCo Could Benefit From Its JV With Suntory In Thailand

08-Nov-2017 Intellasia | Forbes | 6:00 AM Print This Post

PepsiCo recently announced that it is partnering with Suntory Beverage & Food to set up a joint soft drink venture in Thailand, which should help the two companies expand their operations in the country. The latter will pay $289 million to acquire a 51 percent stake in International Refreshment, which is owned by Pepsi. The two companies have an established record of working together successfully in other markets, including the United States, Japan, New Zealand, and Vietnam. Assuming regulatory approval, the venture is expected to be set up in March 2018. Suntory had a joint venture with Thai food giant Tipco Foods, but it was wound down earlier this year.

We have a $123 price estimate for PepsiCo, which is over 10 percent higher than the current market price.

A Mutually Beneficial Deal

Suntory’s growth potential is relatively limited in its home market of Japan as a result of a declining population and market maturity. Accordingly, it is focusing on other Asian markets, and its venture with PepsiCo is rooted in this strategy. Furthermore, Thailand is one of the largest beverage markets in Southeast Asia and is likely to see continued growth going forward as well, backed by its population and GDP growth.

The soft drink market in Thailand is growing and competitive. While Coca-Cola holds the top position in the market, PepsiCo already solid footing in the market, with a strong brand equity, manufacturing facilities, and an established sales network. Meanwhile, Suntory will be able to considerably boost its presence in the market.


Category: Thailand

Print This Post