PepsiCo is moving into new territory by partnering with Müller to launch a range of Müller branded yoghurt products in the US.
Expected growth for both companies
PepsiCo and Müller have created a joint venture, Müller Quaker Dairy, to launch a range of premium yoghurt products in the US. Neither manufacturer currently operates in the American dairy market, where Danone and General Mills already have a strong presence, and the entry is expected to drive considerable growth for both PepsiCo and Müller.
Companies have complementary strengths
Through the joint venture Müller will be able to exploit PepsiCo's scale as the largest US based food and beverage business, operating a robust distribution network, offering well known brands and with deep knowledge of the American market.
Müller's position as one of Europe's largest yoghurt producers means PepsiCo will gain insight into the dairy category and the expertise needed to succeed in it.
Manufacturing capacity being developed
The product range, including Müller Corners, Greek Corners and FrütUp, will initially be launched into north-eastern and mid-Atlantic states this summer using imported goods from Müller's European factories. As part of the joint venture, the companies are investing US$206 million in the construction of a manufacturing plant in Batavia, NY, which is expected to begin production next year. The new factory will enable distribution to be extended to other parts of the US.
Aims to grow premium sector
The US yoghurt market is relatively underdeveloped, with variety and innovation lagging behind that of Europe. By launching the range both companies hope to grow the premium sector of the dairy category in the US, which is less than half the size of the European market and is expected to expand rapidly in the next few years.
PepsiCo already in dairy
The new venture is not PepsiCo's first entry into the dairy category globally. The company acquired Wimm-Bill-Dann, Russia's largest dairy company, in 2011 and has been part of a joint venture with Almarai, Saudi Arabia's largest dairy company, since 2009.
PepsiCo is expanding into new product categories such as dairy so that it can build a global nutrition portfolio worth US$30 billion by 2020.