Win-win strategies

It proved to be a win-win strategy. The company's four food-processing plants in China have witnessed robust progress, the company said, declining to provide specifics on that rate of growth.

The average per capita annual income of more than 10,000 farmers involved in the projects reached 25,000 yuan last year, compared to the national average income for farmers of 4,761 yuan.

Nooyi did not elaborate on the company's plans for coming years, except to say that PepsiCo is carefully studying the market and plans to implement future plans step by step.

Agriculture projects that are developed will focus on high-quality, environmentally sustainable operations, and also on increasing the technological skills and income levels of participating farmers, the company said.

The potato farm in Inner Mongolia was cited as an example.

Covering more than 1,300 hectares, it was developed in the desert. Water-saving irrigation and crop-rotation methods have been adopted, and local farmers receive regular training on modern, environmentally friendly technologies.

Production per hectare at the farm is 39 tons, much higher than the average of 18 tons per hectare in China.

The food sector has become an important profit engine for PepsiCo, since the snacks sector makes up more than 60 percent of the company's revenues.

In China, food accounts for nearly 20 percent of PepsiCo's business, but the company said China is the fastest-growing market for PepsiCo's food segment.

Nooyi, a vegetarian, has led PepsiCo to focus on a heavier concentration of healthier foods with efforts such as the development of corn-based Doritos and the acquisition of Quaker and its oats-based products.

Ding Pin, a food and beverage industry analyst for Haitong Securities, told China Business Weekly that PepsiCo is striving to bolster its healthy snack business by becoming more involved in the raw materials supply chain in China.

"It's a move that's favorable to the company, as well as to local farmers and the Chinese government," Ding said.

PepsiCo, which had sales revenues exceeding US$43 billion last year, is also strengthening its foothold in China on the soft drinks front.

PepsiCo's chief rival, Coca-Cola, generated sales revenues of US$31.94 billion globally last year.

New plant

PepsiCo opened a new plant on June 26 in Chongqing, a municipality in southwestern China.

The soft drink giant said it also plans to fund a variety of major capital programs to grow its manufacturing capacity in China, particularly in interior and western areas.

Over the next two years, five new beverage manufacturing plants are expected to open in Kunming, Zhengzhou, Quanzhou, Lanzhou and Nanchang.

The Chongqing facility is PepsiCo's first overseas "green" plant, which was designed to use 22 percent less water and 23 percent less energy than the average PepsiCo plants here.

PepsiCo, meanwhile, announced plans to strengthen its local research and development capabilities and broaden its portfolio of Chinese-designed and developed products such as Tropicana juices, Lay's Lychee potato chips and Cao Ben Le ("happy herb" in Chinese) drinks.

The company has built 22 bottling plants and a concentrates facility in China, with total investments exceeding US$1 billion so far.

China is the largest overseas market for PepsiCo's beverage business.