Lotte Chilsung Acquires Management Rights of Philippine Pepsi... "Leap to Global Beverage Company"

Acquired 34.4% Stake in 2010, Expanded to 73.6%

Lotte Chilsung Beverage has completed the acquisition of management rights for 'Philippine Pepsi (PCPPI)', which has an annual sales scale of about 1 trillion KRW, accelerating its leap to become a global comprehensive beverage company.

PCPPI Santo Tomas Factory in the Philippines Overview

On the 4th, Lotte Chilsung Beverage announced that it had completed the final procedures for acquiring management rights of Philippine Pepsi through the Philippine Securities and Exchange Commission on the 29th of last month. Starting with acquiring a 34.4% stake in Philippine Pepsi in 2010 when it began full-scale global management, Lotte Chilsung continued joint management and additional stake acquisition with the global food and beverage company 'PEPSICO', and after 13 years, it secured management rights independently.

With this acquisition of management rights, Lotte Chilsung will incorporate Philippine Pepsi as a subsidiary and will be able to directly reflect its performance such as sales and operating profit in the consolidated financial statements from the fourth quarter of this year. Philippine Pepsi's annual sales were 728.7 billion KRW in 2020, 761.2 billion KRW in 2021, and 908.7 billion KRW in 2022, with sales expected to reach about 1 trillion KRW this year. Lotte Chilsung expects that next year, when Philippine Pepsi's performance is fully reflected in the consolidated financial statements, annual sales will exceed 4 trillion KRW, growing fourfold in 23 years since achieving 1 trillion KRW in annual sales in 2001.

In the early 2000s, Lotte Chilsung selected the Philippines as an attractive country to expand its beverage business due to its population of about 100 million, a young demographic with an average age in the early to mid-20s, high preference for carbonated drinks, and tropical seasonal climate. Leveraging the expertise and know-how of Korea's top beverage company, Lotte Chilsung adopted a strategy to enter the local market stably while reducing risk compared to direct investment by acquiring shares in Philippine Pepsi, the second-largest beverage company in the Philippines with a solid local market base.

Since initially acquiring a 34.4% stake in Philippine Pepsi in 2010, Lotte Chilsung has increased its shareholding to 73.6% through additional share purchases from PEPSICO and public tender offers on the Philippine Stock Exchange. Currently, Philippine Pepsi operates 12 factories, 14 sales branches, and 69 sales offices across Luzon, Visayas, and Mindanao regions, producing and selling major products such as Pepsi Cola, Mountain Dew, Gatorade, and Sting. Lotte Chilsung plans to use Philippine Pepsi as a foothold for Southeast Asian expansion by locally producing and distributing its own beverage and soju brands such as Milkis and Chum-Churum, aiming to expand its global business.

A Lotte Chilsung official said, "With this acquisition of management rights, the proportion of overseas sales including export performance will expand to the high 30% range next year, marking the first year of becoming a global comprehensive beverage company." He added, "Through activities to improve profitability such as improving work processes by building IT infrastructure, introducing automation facilities, and optimizing logistics networks, we plan to improve Philippine Pepsi's operating profit margin to 8.5% by 2025."

This content was produced with the assistance of AI translation services.