PepsiCo has said that it will be buying Chinese snack brand Be & Cheery from Chinese food company Haoxiangni Health Food Co Ltd. The US beverage giant said will be paying $705 million to Haoxiangni Health Food Co Ltd to buy the online snack company. The news was also confirmed by Haoxiangni Health Food Co Ltd on Monday.
PepsiCo has been trying to expand it footprint in China's growing food and beverage market and this acquisition certainly is a big step towards that. At the same time, buying a brand like Be & Cheery is also an indication that an increasing number of companies across the globe are trying to adopt the business models of China's consumer-facing companies and their active e-commerce platforms.
A big step for PepsiCo
Buying Be & Cheery definitely is one of the major moves by PepsiCo in recent times. This is also the U.S. multinational food and beverage maker's biggest acquisition in China. PepsiCo said that acquisition of Be & Cherry, which sells from nuts to dry fruits on e-commerce platforms, is a major step towards its goal of becoming China's leading food and beverage company.
Ram Krishnan, CEO of PepsiCo Greater China, in a statement said, "Be & Cheery adds direct-to-consumer capability, positioning 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." Be & Cheery is one of China's biggest online snack companies and was founded in 2003.
PepsiCo tries to experiment
Haoxiangni, which is based in the eastern city of Hangzhou, was planning to do away with the Be & Cheery brand as it wants to focus solely on its jujube business. Haoxiangni Health Food Co Ltd is one of the leading jujube makers in China. PepsiCo's decision to buy Be & Cherry is a strategic move given that it will get an already popular brand to further penetrate the China market.
At the same time, it also is an indication that the business models adopted by Chinese companies are being followed by other foreign companies. Be & Cheery sells snacks online through Chinese e-commerce platforms like Tmall. This allows the company to directly sell to customers and at the same time enable price changes and promotions faster based on consumer demand.
PepsiCo has been in China for the past 40 but this acquisition comes at a time when many US companies like Yum Brands owned KFC and McDonald's have pulled out of China in recent times. Many other companies in the last couple of years also pulled out of China owing to the trade dispute PepsiCo on the other hand agreed to buy a 26% stake in China's second-largest health food producer Shenzhen-based Natural Food International.