UPDATE 4-PepsiCo to invest $3 bln in Mexico, backs view

* PepsiCo investing up to $3 billion in Mexico

* Repeats FY 2008 EPS view $3.67-$3.68 ex-items

* Shares down 3.5 percent

(Adds Mexico investment, comment, previous NEW YORK)

By Lisa Baertlein

LOS ANGELES, Nov 20 (Reuters) - PepsiCo Inc (PEP.N) will invest up to $3 billion in Mexico over the next few years to grow its Sabritas and Gamesa foods business and its beverage brands, the company said on Thursday.

Earlier in the day, the company stood by its full-year 2008 earnings outlook and outlined marketing and product plans for its North American beverage unit, where it faces weaker soft drink sales.

PepsiCo said about $2 billion of the Mexico investment will be used to pay for research and development, manufacturing, distribution, marketing and advertising for its food businesses in the Mexican marketplace over the next five years.

Part of the money will be used to introduce some of those food brands to the U.S. market.

The remaining $1 billion is earmarked for marketing and advertising for Pepsi beverages across Mexico for three years.

"For the last 100 years, Mexico has been a key market for PepsiCo and today's news is the latest proof that we will continue to invest," said Compton, who announced the investment at an event in Mexico City.

PepsiCo, which said it has 40,000 employees in Mexico, said it is one of the country's largest employers.

Pepsi shares fell 3.5 percent to $50.29 on the New York Stock Exchange.

LESS THIRST FOR DRINKS

Pepsi said last month that soft drink volume in North America fell 3 percent in the fiscal third quarter, hurt by weak demand for beverages such as Pepsi and Sierra Mist and bottled water, as consumers cut back in a contracting economy.

While it is difficult to forecast the future direction of that segment, Chief Executive Indra Nooyi said the company's Frito-Lay snack business remains healthy.