Suntory To Sell Soft Drinks In China Using PepsiCo Network

TOKYO -(Dow Jones)- Suntory Holdings Ltd. said Monday it will start selling its soft drinks in China's Guangdong province from January using the local sales network of PepsiCo Inc., to further expand its reach into that country's market.

This highlights Suntory's strategy of expanding in step with the rapid growth of the Chinese market, and marks a shift from marketing only in major Chinese cities.

Suntory bottles and distributes PepsiCo products in Japan; it also has a presence in China, but its beer and soft drink activities there are limited to Shanghai and Beijing.

The privately held Japanese company will start by selling its "Rich" milk- based soft drink in Guangdong province, and then consider expanding sales to other areas.

Through increasing its scope, Suntory aims to raise its soft drink sales to 10 million cases in 2010 and 30 million cases by 2012, from 6.8 million cases estimated for 2009. It is targeting soft drink sales value of Y20 billion by 2012, about fivefold from the 2009 level.

Suntory has been striving to raise its presence overseas in the face of a gloomy outlook for Japan with its shrinking population and weak economy, and so has made various foreign acquisitions recently.

Earlier this month, it agreed to buy a majority stake in Hong Kong-based wine importer ASC Fine Wines Holding Ltd. And last month, Suntory completed its acquisition of privately held European beverage maker Orangina Schweppes Group.

-By Hiroyuki Kachi, Dow Jones Newswires; +81-3-6269-2789; Hiroyuki.Kachi@ dowjones.com

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  12-27-09 2049ET
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