PepsiCo looks to buy Chinese online snack brand
PepsiCo Inc said it plans to buy local online snacks company Hangzhou Haomusi Food Co for US$705 million from parent company Haoxiangni Health Food Co to strengthen its footprint in China.
Haomisu Food Co, which sells packaged snack, dried fruit and confectionery under the brand Be & Cheery through online channels, is expected to boost PepsiCo's performance in the snacking business.
“Be & Cheery is highly complementary to our existing China business with its broad product portfolio, asset light model, and focus on e-commerce,” said Ram Krishnan, CEO of PepsiCo China.
The Hangzhou-based company sells more than 1,000 types of snacks and PepsiCo would also acquire 329 exclusive trademark rights for these packaged foods.
The US company also intends to leverage Be & Cheery’s innovation and consumer insights capabilities to drive innovation in other key PepsiCo growth markets.
“As we look to accelerate growth in key markets around the world, Be & Cheery adds direct-to-consumer capability, and allows us to capitalize on continued growth in e-commerce, and a local brand that is able to stretch across a broad portfolio of products, through both online and offline channels," Krishnan added.
"PepsiCo and Be & Cheery are jointly confident in the prospects for China’s snacks industry and share a commitment to investing in consumer-led and digitalized capabilities and we believe PepsiCo’s strong branding and route-to-market capabilities as well as global supply chain network will help further expansion missions," said Chairman of Be & Cheery Qiu Haoqun.
The deal is subject to shareholder voting and Chinese anti-monopoly regulatory approvals.
The move follows PepsiCo's US$131 million acquisition in July last year for 26 percent of Chinese natural health food company Natural Food International Holding, which mainly sells grain-based powder.
Haoxiangni said it intends to use the proceeds to pay back debts and focus on core business of Chinese date-related products and other heath foods.
Be & Cheery recorded 3.9 billion yuan (US$550 million) of sales in 2018, accounting for 78 percent of its parent company's revenue, and Haoxiangni thus warns of potential revenue and profitability losses following the close of the deal.
In 2019, sales of Be & Cheery surged to 5.02 billion yuan, with 96 percent of sales coming from digital channels.
