Pepsi, a US multinational food and beverage maker, has agreed to buy Chinese snack brand Be & Cheery from Haoxiangni Inc. in a deal worth $705m, subject to regulatory approvals and shareholder votes. Be & Cheery was founded in 2003, and quickly established itself as one of the biggest online snack companies in China.
Haoxiangni, based in the eastern city of Hangzhou, said Be & Cheery reported sales of around $700m, last year.
Why Pepsi is buying Be & Cheery
Pepsi wants to become the leading consumer food and beverage business in China. The company reiterated that one of its goals is to dominate the Chinese market when it comes to food and beverages. The value of China’s snack market increased by more than 400% between 2006 and 2016, according to a 2019 estimate from the country’s Ministry of Commerce. The ministry said it expects the market to be worth nearly $427bn this year.
Haoxiangni bought Be & Cheery in 2016 for $136.5m, five times what Pepsi has agreed to pay.
Repositioning for e-commerce growth
Another reason why Pepsi is buying Be & Cheery, which mostly sells nuts, dried fruits and other snacks online, is to capitalize on the e-commerce potential of the business in China. “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,” Ram Krishnan, CEO of PepsiCo Greater China, said.
Leveraging on Be & Cheery’s innovation
The US giant also wants to use the innovation and consumer insight that local brand Be & Cheery offers to grow its market share.
“One of the critical opportunities for PepsiCo is to develop the international business,” PepsiCo Chairman and chief executive Ramon Laguarta (pictured) told investors during an earnings presentation earlier this month. “And China, of course, is a huge market, where we have a good business. It’s growing very well . . . But the opportunity is much, much higher.”