US food and beverage giant PepsiCo Inc revealed on Sunday that it will be acquiring one of China's largest online snacks company, Hangzhou Haomusi Food Co Ltd. The Chinese firm, also known as Be & Cheery, has apparently signed a definitive agreement with PepsiCo for the acquisition.
PepsiCo will be purchasing the Chinese firm from its current owner Haoxiangni Health Food Co Ltd for $705 million. The acquisition is expected to help PepsiCo's Chinese business reach its goal of becoming the country's largest consumer food and beverage provider. PepsiCo has been operating in China since the 1980s, slowly acquiring market share in one of the most lucrative food and beverage markets in the world.
Be & Cheery is currently considered to be among the top three food and beverage companies in China, right beside Bestore and Three Squirrels. The company provides a wide array of consumer food products, including meat snacks, baked goods, pastries, dried fruits, and packaged nuts. The company predominantly sells its products online through popular Chinese e-commerce platforms.
The Chinese firm, which was established in 2003, set up its first e-commerce store on Alibaba's Taobao.com platform in 2010. In 2016, the company was acquired by owner Haoxiangni Health Food Co Ltd for $136.6 million.
According to PepsiCo, it plans to leverage Be & Cheery's strong data-led business model, which is capable of quickly adapting to changing consumer needs. The US firm added that Be & Cheery's business is highly complementary to its operations in China. PepsiCo China CEO, Ram Krishnan, added that the company should work hand-in-hand with its plans to focus on e-commerce for its broad portfolio of products.
The acquisition is part of PepsiCo's wide goal of accelerating growth in its key markets around the world. The company hopes to achieve that goal by tapping into Be & Cheery's direct-to-consumer business model, which should position it to grow its e-commerce earnings.
Be & Cheery Chairman, Haoqun Qiu, mentioned in a statement PepsiCo's strong brand and its global supply chain should help the company expand its business in China. The executive expressed confidence in both companies' abilities to increase prospects in China's snacks industry.
Meanwhile, Haoxiangni Health Food stated that the sale of Be & Cheery to PepsiCo should allow it to focus more on its core products. This includes the further development of its line of products based on local specialty agricultural harvests such as red dates. The company plans to use the proceeds of the sale for the further developments of its portfolio.
The acquisition will still subject to regulatory approval and a vote by Haoxiangni's shareholders. Analysts have pointed out that once the acquisition is completed, PepsiCo is expected to get a big boost in its revenues in the country. This should offset the company's stagnating profits for its beverage unit in China.
