Pepsi's mysterious merger attempt unconfirmed

By Charlotte Eyre

- Last updated on GMT

Related tags: Nutrition, Coca-cola, Health, Nestlé

Nestle today refused to confirm reports that they had turned down a
merger with PepsiCo last spring, a deal that would have created one
of the largest and most powerful food and beverage companies in the
world.

Media spokesman François-Xavier Perroud did tell BeverageDaily.com however that such an acquisition would not fit in with Nestle's focus on the health and wellness market. "We have explained this acquisition strategy again and again,"​ he said. "PepsiCo just doesn't fit with Nestle's ideas." ​The original report, printed in the Wall Street Journal last week, claimed that Nestle rejected the offer because of Pepsi's focus on unhealthy carbonated drinks and snacks. The Swiss company has already pledged its commitment to the healthy trend, announcing last month a 10 year model which will focus on organic growth in health, wellness and nutrition of five to six per cent over the next ten years. Pepsi, on the other hand, has only made some concessions towards the healthy trend, such as reducing salt in some products and pledging to keep advertising for children to a minimum. It will still need to make a big acquisition to gain a strong foot-hold into the health trend, the Wall Street Journal concluded. The beverage company also approached Nestle because of its interest in emerging market growth, the newspaper reported, as Pepsi still relies on the US for 37 per cent of its revenue. Pepsi's has indeed made investments in some booming markets over the past year. The company already plans to double its Chinese workforce over the next five years, it announced in April, where sales of fizzy drinks are growing four times as fast as in the US and Western Europe. Pepsi added that it was also preparing to invest a further €635m into its Chinese operations between 2006 and 2009. Another area under Pepsi's watchful eye is Eastern Europe, where the Russian economy alone benefited from €455m of investment last year.

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