PepsiCo chief executive Kyle Faulconer wants clarity on government aid for manufacturing
The Australian chief executive of snack and drinks giant PepsiCo has called on the government to provide more certainty about its assistance plans for local manufacturing.
The Australian chief executive of snack and drinks giant PepsiCo, Kyle Faulconer, has called on the government to provide more certainty about its assistance plans for local manufacturing.
Mr Faulconer, in an interview, said the company would embark on a $40m upgrade to its production lines in Adelaide. The industry wanted the government to clarify its policies in the wake of an election promise to abolish the Manufacturing Modernisation Fund, Mr Faulconer added.
“In a … jurisdiction like Australia, with record inflation, there is a strong argument for the federal government to support domestic manufacturing,” he said, adding it was essential to “fill the gap” caused by the fund’s cancellation.
The Albanese government has said it will abolish a range of existing industry assistance funds, replacing them with a $15bn National Reconstruction Fund as part of its plans to boost the local manufacturing industry.
While the government says it will honour existing commitments made under the Manufacturing Modernisation Fund and others like it, a lack of details about the government’s policies for the sector are creating increasing uncertainty in the industry.
Mr Faulconer said the tax benefits for capital expenditure under the current arrangement were a “welcome start that could be used by small to large manufacturers”.
He said there was also a pressing need to address the skills shortage in the tech industry.
Speaking ahead of the new announcement of the Adelaide plant’s upgrade, Mr Faulconer said the increased focus on local production of healthier snack foods was a key part of PepsiCo’s strategy to boost its sales in Australia to more than $2bn.
The Adelaide plant will manufacture products for its new Simply line – the first potato chip in Australia with a four-star health rating. The company will also reformulate its existing snack brands including Doritos, Smith’s Baked and Red Rock Deli Crackers to achieve a rating of 3.5.
Mr Faulconer said PepsiCo saw a move to lower salt and fat snacks as one of the key moves behind its growth strategy in Australia, where its business is divided between drinks and snack foods.
“Over the next four years, PepsiCo Australia expects about 30 per cent of our business growth to stem from products which have a health star rating of 3.5 and above,” he said.
PepsiCo’s Australian snacks are manufactured in plants in South Australia and Queensland.
Its drinks products are manufactured in Australia by Asahi.
The decision to significantly upgrade its Adelaide plant follows a $4m investment in production in 2019 when it changed its cooking oil from palm oil to the healthier canola oil, and an $18m investment in 2020 to update the plant to produce a lower-fat version of its Smith’s chips.
The company’s products also include Doritos, Twisties, Burger Rings, Cheetos and Tostitos.
Mr Faulconer said the shift to having people working from home as a result of the pandemic had increased the demand for snack food in Australia.
“With a lot more people working from home we have found shifting patterns (in consumer demand) including more snacking,” Mr Faulconer said.
“But the demand has been for healthier snacking and a shift away from sweets and confectionery, to more savoury snacking.”
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