PepsiCo has identified as many as 20 potential takeover targets in Europe as part of the US food and beverage group’s drive to boost its international sales and margins.
International sales account for about a third of Pepsi’s group revenues, less than most of its global peers, and it has already bolstered its position with a series of purchases in recent months.
“Europe is still very fragmented, whether you are talking juice and water, or looking at the snacks business," said Mike White, chairman and chief executive of Pepsi’s international business, in an interview with FT Deutschland, the Financial Times’s German sister paper. “I think there are lots of opportunities. They come along at their own pace.”
“Our focus is to grow our existing business," he said. "And then there are what we call ‘tuck under’ acquisitions that can strengthen our position in a country. Certainly we will look at those and be active."
White declined to be drawn on potential targets, though he stressed Pepsi would not pursue all of the opportunities or rely on acquisitions alone for growth in Europe.
However, it has employed a strategy of adding local products to global brands such as its eponymous cola, Tropicana fruit juices and Frito-Lay snacks. "Where we are most successful, we have a portfolio that’s typically 40 per cent local brands, and only 60 per cent with a global presence. I think that’s the balance," said White.
Pepsi announced this month it had acquired Punica, a German juice maker, and also agreed to buy Pete & Johnny, the UK-based smoothie maker.
These "tuck-in" deals came on the heels of last December’s agreement to buy out US-based General Mills in Snack Ventures Europe, a joint-venture established in 1992 that became the largest snack food company in continental Europe with annual sales of more than $1 billion and a particularly strong presence in the Benelux countries, Spain and Portugal.
While Pepsi has a strong position in the UK snacks business, it has virtually no presence in the sector in Germany and Italy, markets dominated by regional players.
Analysts have pointed to potential targets such as Bahlsen, a privately-owned German group specialising in crisps and salty snacks, though its owners maintain it is not for sale.
PepsiCo is also viewed by analysts as under- represented in the bottled water sector, one of the fastest-growing in Europe.
The company has a strong position in the US with its Aquavina brand, though White said this was unlikely to be rolled out in Europe.
"(Coca-Cola) has stumbled quite a bit, trying to do Dasani (Coke’s water brand) in Europe and failing. From our standpoint, we have a wonderful water business in Russia, Hungary and Greece, but it’s not really a priority in the other European markets," he said.
He added that the water business "tends to be more fragmented as an industry in Europe" and is more driven by source water consumption.
White also reiterated his target for international sales to grow twice as fast as US revenues.