Pepsi Enters Burma with ‘Responsible Investment’

By Lalit K Jha 10 August 2012

WASHINGTON DC—Soft drink giant PepsiCo announced on Thursday that it will soon enter the Burmese market in news welcomed by the Obama administration which emphasized the need for US businesses to set a model for responsible investment in the country.

“The US supports the Burmese government’s ongoing reform efforts and believes that the participation of US businesses in the Burmese economy will set a model for responsible investment and business operations, as well as encourage further change, promote economic development and contribute to the welfare of the Burmese people,” State Department spokesman Patrick Ventrell told reporters.

PepsiCo, one of the world’s largest food and beverage companies, has entered into an agreement with Rangoon-based Diamond Star which gives the Burmese company the exclusive rights to import, sell and distribute Pepsi-Cola, 7-Up and Mirinda. These three top brands each generate more than US $1 billion in annual retail sales as part of the company’s total portfolio of 22 products.

PepsiCo chief Indra Nooyi said that she considers Burma a market with great potential. Her company has also signed a Memorandum of Understanding with the United Nations Educational, Scientific and Cultural Organization (UNESCO) to partner on vocational training initiatives in Burma.

“Myanmar is a market with great potential, and our agreements with Diamond Star and UNESCO are important first steps towards expanding our presence in the country,” said Nooyi. PepsiCo last did business in Burma in 1997.

“Over time, we believe we can build a strong business in Myanmar and play a positive role in the country’s continued development,” she added. During the pace of economic downturn, it is the Asian markets—India and China in particular—which has been primarily responsible for the continued growth of US soft drink manufacturers including rivals Coca-Cola.

PepsiCo announced it also plans to explore opportunities to invest in agricultural development projects in Burma. One of the world’s largest agricultural enterprises, PepsiCo sources more than four million tons of potatoes annually and works with thousands of local farmers around the globe to make its products, it said in a statement.

PepsiCo and UNESCO plan to work together to provide programs that focus on managerial skills training to support the country’s development, empower its people and strengthen the workforce as the soft drinks giant looks to expand its business in the future, it added.

Diamond Star, which is one of the largest packaged consumer goods distributors in Burma, welcomed the agreement. “PepsiCo is a world-class company that emphasizes an exemplary code of conduct and a sustainable approach to business with a focus on people at its center,” said Managing Director Ko Ko Gyi.

UNESCO Director-General Irina Bokova said that giving youth the skills they need to secure decent jobs, improve their livelihoods and shape their future is vital for successful national transformation.

“Private corporate partners have a determining role to play in this ambition, and UNESCO warmly welcomes this new partnership with PepsiCo to show how we can work together for the benefit of Myanmar’s youth—its most valuable resource,” she said.

The major announcement comes less than a month after a high-level delegation of American businesses, led by the Under Secretary of State for Energy, Growth and the Environment Robert Hormats, traveled to Burma to hold a series of meetings with local businesses. This was the first such visit in over a quarter of a century.

“We want American companies to go in, but we want them to be responsible investors, which is to say that they have to do a lot before they make investment. They have to understand the complexity of the country,” Hormats told reporters in Washington on July 14, adding that “the US government is trying to work with [the companies].”

Pulled together by the Asean-US Business Council, the delegation represented a wide range of industries with senior executives from around 40 top firms present. They had meetings with a number of the government ministers in order to develop a get a sense of the investment environment.