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- US beverage and snacks giant PepsiCo is banking on its empowerment commitments in SA to grow its business to other sub-Saharan countries.
- The company launched a R1.7 billion employee share scheme in 2022 shortly after announcing a R600 million development fund to benefit local suppliers and support emerging farmers.
- PepsiCo estimates that beneficiaries of its employee share scheme will gain between R250 000 and R350 000 each over 17 to 20 years.
- For more financial news, go to the News24 Business front page.
When PepsiCo acquired Pioneer Foods in 2020, that R24 billion transaction wasn't only among the biggest the beverage and chips giant ever concluded outside of the US – it also paved the way for one of SA's largest empowerment deals.
Two years after the merger, PepsiCo launched a R1.7 billion employee share scheme for its SA staff as part of the conditions imposed by the Competition Tribunal.
A year after the launch of the workers' trust – and two others to develop local communities and boost PepsiCo's local procurement – the company is already preparing to "beat the enemy red" and take its combined brands beyond SA borders.
Speaking at the Nedbank Top Empowerment Conference this week, PepsiCo's director of corporate affairs, Nico Moloto, said the merger has made them relevant in almost every food production department.
"Pioneer Foods has got a vast and robust portfolio of products. All of us had breakfast, all of us had lunch, and we are going to have dinner. During weekends, some of you are going to have parties. Some of you will have braais, and Pioneer Foods and PepsiCo products find themselves on all those occasions."
Known to be one of the world's largest food and drink companies, PepsiCo now also owns brands like WeetBix, Liquifruit, Sasko, Bokomo cereals, Lays, Doritos and Simba chips. Moloto sees the group's South African business growing beyond SA borders.
"Our intent is to really grow this business into the rest of the continent," he said.
READ | PepsiCo's Pioneer acquires remaining 50% stake in Futurelife
Moloto said that the empowerment commitments that the company made in 2020 will be a big catalyst for this growth. The company has invested R600 million to develop local supplies and support emerging farmers in SA, which Moloto foresees playing a big part in PepsiCo's expansion beyond SA.
How workers will benefit long-term
The R1.7 billion shares that PepsiCo Inc. gifted to its SA employees are listed on the Nasdaq Stock Exchange. The trust paid out just over R20 million in dividends this February, equating to R1 908.35 for each of the 30 000 participating employees. It also paid its maiden dividend of R4 million in 2022.
However, PepsiCo SA transformation director, Derick Appia-Kubi, calculated that participating workers stand to gain anywhere between R250 000 and R350 000 each over 17 to 20 years. That's because the employees will get "milestone" payments every five years that they remain employed in the company and participate in the scheme for as long as the trust exists.
"That is a down payment on the house, a car or paying for your kids' school fees," said Appia-Kubi.
Appia-Kubi said that when the group began this transformation journey three years ago, its broad-based black economic empowerment (B-BBEE) status was at Level 8. It is now sitting at Level 5 and hopes to be much improved after five years.
With an extended local supplier base and dedicated employees benefitting from its empowerment initiatives, PepsiCo believes it will be a much bigger force to be reckoned with in Africa in the next five years. Appia-Kubi said that five years from now, PepsiCo should be "beating the enemy red". Staff in its empowerment scheme have hit their first milestone payment, which is significantly larger than the annual dividends.
"The reason why PepsiCo and Pioneer Foods came together is because we see an opportunity to make a difference in the market, not only on this market but throughout sub-Saharan Africa as well," said Appia-Kubi.
