Today’s news of PepsiCo’s significant planned purchase of a majority stake in the Russian juice company Lebedyansky is another indication of the buoyant enthusiasm of Western firms to compete with their rivals for Russia’s booming consumer market. Lebedyansky controls more than 30% of the juice market in Russia, giving PepsiCo a leg up on Coca-Cola, which controls a little over 20% of the market thanks to a major acquisition in 2005.
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2 Comments
I don’t see Pepsi’s move as an indication of “buoyant enthusiasm” nor do I think that Russia’s consumer market is “booming.”Russia’s average national wage is $3/hour and it’s far less in the provinces far from Moscow and Piter. What kind of consumer “boom” could wages of that kind possibly engender?Only a very small number of Western consumer products firms have the slightest interest in Russia and, as I see it, their interest is motivated by the obsessive desire of their stockholders for growth and the realities of having exhausted most of the other markets on the planet. They simply can’t resist Russia because of its population size, but their inability is no different than the inability of certain people to resist smoking cigarettes even though they know they’ll perish as a result. Basically, it’s just the manifestation of an addiction.Once the Kremlin has finished gorging itself on the energy sector and turns its attention to other potential centers of power, these few firms will quickly change their tune as well.
I agree that Western consumer products like this have a tough time over there. See our earlier post on Campbell’s foray…http://www.robertamsterdam.com/2007/07/campbells_salivates_over_the_r.htmRetail, banking, and other consumer goods are, like it or not, hot growth areas in Russia. I have the feeling that mining companies are going to be the next to come under nationalization.