03 Dec 2024 Massive expansion at PepsiCo SA’s Isando chip factory

PepsiCo SA has expanded its Isando factory with a new state-of-the-art potato chip production line with a R746-million capex….

In its biggest investment since it acquired Pioneer Foods in 2020, PepsiCo has spent 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 SA 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.

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.

“Alongside creating 100 new jobs, this new line shows our commitment to innovation and efficiency, as we continue to deliver high-quality products to the market.”

Multiple suppliers were contracted to build the line, including:

• LOCKWOOD Manufacturing
• Pulsemaster
• Urschel Laboratories
• FPS Food Process Solutions
• Scotts Precision Manufacturing
• Marel
• Fam Stumabo
• Grimme

Much improved logistics

PepsiCo SA also produces 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 SA 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.”

Source: PepsiCo SA, News24.com