By Martinne Geller and Dmitry Zhdannikov
DAVOS, Switzerland Jan 24 Pepsico, Nestle and
Cisco on Friday announced major investments that together
totaled more than $7 billion in Mexico, where the government has
pushed through a series of economic reforms that aim to boost
foreign investment and growth.
Mexico has embraced free trade policies in recent decades,
and has drawn growing investment interest after President
Enrique Pena Nieto made a landmark reform drive in his first
year in office, pushing major telecommunications, energy,
banking and tax legislation through a divided Congress.
"It is very encouraging to see the enthusiasm that has been
awoken by our country due to the structural changes that are
happening," Pena Nieto said at the World Economic Forum (WEF) in
Pepsico said it would spend $5 billion in Mexico
over five years to strengthen its food and beverage business,
adding it planned to expand its production capacity by adding
new manufacturing lines and expand delivery routes.
The company said the investment was expected to create 4,000
The Pepsico investment comes despite a new levy on soft
drinks and junk foods included in Pena Nieto's tax overhaul.
Nestle said it planned to invest $1 billion in
Mexico over five years, building two new factories and expanding
a third in its sixth-biggest market.
The world's No. 1 food maker said it would build an infant
nutrition factory in Jalisco and a pet-food factory in
Guanajuato, as well as expanding an existing cereal factory.
The investment would create 700 direct jobs, Nestle said.
The Mexican factories will produce goods for the wider
region. For example, about 40 percent of the output from the
baby food factory will be exported to Latin America and the
In the third major investment announcement at Davos, Network
equipment maker Cisco Systems Inc said it would direct
$1.35 billion into Mexican manufacturing operations and a
support center this year.
Pena Nieto has said that foreign direct investment (FDI) in
Mexico totaled $28 billion during the first 9 months of 2013.
FDI was boosted last year by the Belgian-based beer giant
Anheuser-Busch InBev's acquisition of Grupo Modelo
, which went through at the end of May and brought
in about $13 billion.
Separately, Mexican state-run company Pemex will sign a
cooperation memorandum with Russia's No.2 oil producer Lukoil
on Friday, Pemex chief executive Emilio Lozoya told
Reuters, as the country is opening up its energy sector in a
move to boost production.
Lozoya said that Pemex and Lukoil would share information on
the deep water and shale deposits that Mexico currently lacks
the expertise to tap.
The planned cooperation between Lukoil and Pemex comes after
Pena Nieto last month signed a bill into law that ended the
country's 75-year-old oil and gas monopoly.
Under the legislation, which is still being mapped out,
foreign companies will be able to enter the sector as Pemex is
seeking to bring in expertise and boost efficiency.
"There are dozens of new players who now come and look at
the opportunities that are opening up in Mexico," Pemex CEO
Lozoya said he met with various companies in Davos that
expressed interest in exploration and production projects in
Mexico as well as refining, petrochemicals and transportation
businesses that are now open to private investment.
As a private company, Lukoil is struggling to get large new
deposits in Russia, including offshore, and is actively pursuing
a foreign expansion to maintain its production levels.