Lotte Chilsung secures majority stake in Pepsi Philippines

Lotte Chilsung Beverage Co., a household name in South Korea’s soft drink market, said on Wednesday it has secured management rights of Pepsi-Cola Products Philippines Inc. with a 73.6% stake in a bid to expand beyond its home turf.

Since taking a 34.4% stake in the Philippines-based operations of PepsiCo. in 2010, Lotte Chilsung has increased its shareholding in the latter through direct purchases from its parent PepsiCo. and a tender offer on the Philippine Stock Exchange.

It previously jointly managed the unit with the headquarters of PepsiCo.

Pepsi Philippines bottles and distributes Pepsi sodas such as its cola and Mountain Dew, as well as the sports drink Gatorade and the energy drink Sting.

It operates 12 factories and 14 sales branches in the Philippines.

Lotte Chilsung plans to use Pepsi Philippines’ facilities to produce and distribute not only Pepsi sodas but also its own beverages, including soft drink Milkis and spirits such as Chum-Churum.

It hopes the Philippines-based operations to serve as a springboard for its expansion into Southeast Asia and eventually global markets.

“With this acquisition of management rights, the proportion of our overseas sales, including exports, will expand to the upper 30% range next year,” said a Lotte Chilsung official.

"Next year we will be reborn as a global beverage company."

Lotte plans to boost Pepsi Philippines’ operating profit margin to 8.5% by 2025 through work process improvement by building information technology infrastructure and automated facilities, while optimizing logistics networks.

Lotte Chilsung will reflect Pepsi Philippines’ results in its consolidated financial statements from the current quarter.

Pepsi Philippines’ sales climbed to 908.7 billion won ($667 million) in 2022, compared to 761.2 billion won in 2021 and 728.7 billion won in 2020. Its revenue is expected to grow to the 1 trillion won range, Lotte Chilsung said.

When reflecting Pepsi Philippines’ full-year results, Lotte Chilsung’s revenue in 2024 is projected to top 4 trillion won.

This year, Lotte Chilsung forecasts its revenue to reach 3.27 trillion won, versus 2.8 trillion won in 2022, according to its disclosure in August this year. 

Write to Ji-Yoon Yang at yang@hankyung.com
 


Yeonhee Kim edited this article.