PepsiCo invests R746m in massive expansion at Simba, Lay's chip factory

In its biggest investment in Gauteng since it acquired Pioneer Foods in 2020, PepsiCo has invested R746 million in expanding its Simba and Lays potato chip production capacity at its Isando snacks factory.

PepsiCo South Africa, the country's largest potato chip producer, believes this will help it keep up with demand from its largest market locally, while also slashing transport costs and CO2 emissions.

The new potato chip line uses 35% less water and is 3% more energy efficient than existing technology at the Isando factory.

Among other things, R100 million has been invested in an anaerobic digester plant at the facility that can transform organic waste from the chip-making process into biofuel used to generate power on-site.

Vote of confidence

PepsiCo South Africa CEO Riaan Heyl sees the investment as a vote of confidence in SA and the broader African continent's prospects.

Heyl told News24 that when PepsiCo first acquired Pioneer Foods – what is now called PepsiCo South Africa – in 2020, for about R24 billion, it was a "long-term investment in South Africa and, of course, the continent as well".

"This is just a reinforcement of that," he said.

The anaerobic digester plant transforms organic solid waste, such as reject potatoes, peels and other remnants generated on-site at Isando, into biogas. This biogas will be used to fuel a gas-fired engine that can generate up to 780 kW of electrical energy for use at the facility — or around 30% of the Isando factory's peak electrical demand.

Explaining the expansion, Heyl said the plant, which also manufactures other snacks in the PepsiCo SA portfolio, had been running at relatively high levels of capacity while raw material supplies had been disrupted, notwithstanding its own extensive agro-growing programme across the country.

"And if you are running your production facilities at relatively high levels of capacity, of course your ability to catch up after having a disruption in raw material supply takes longer than it ideally should," he said. "But this expansion not only gives us the ability to have more capacity for future growth, but also enhances our service levels and ensures supply continuity."

Chip-loads by the thousands

As things stand, PepsiCo SA also has capacity to produce potato chips at two other facilities in Prospecton, Durban and Parow in Cape Town, but Isando is by far the largest and closest to major consumer demand centres. Inland, demand for potato chips has historically exceeded Isando’s capacity, resulting in significant quantities having to be transported from Parow and Prospecton.

With the new Isando capacity, however, around 2 300 loads of potato chips will no longer be required to travel from these two factories to Gauteng – a saving of 2.2 million kilometres of travel per annum, he said.

This not only presents a significant saving opportunity for the group, said Heyl, but also means a significant reduction in CO2 emissions.

The additional capacity also means that if the South African economy improves, PepsiCo SA will be well positioned to meet increasing demand.

Heyl said there was "definitely more positive sentiment" in the wake of the formation of the Government of National Unity, and that this was being seen in a "number of lead economic indicators".

"How quickly that converts into absolute demand, time will tell, but the positive sentiment bodes well for the country, clearly."

-FIN24