Pepsi Bottling Group Inc. of Somers, N.Y., is adding four injection stretch blow molding cells to make PET bottles.
One source said industry suppliers to Pepsi have curtailed new capital for carbonated soft drinks and water bottles, and Pepsi decided to make its own bottles.
``We're big believers that in this business, you're not going to save your way to prosperity,'' said Eric Foss, Pepsi Bottling Group's chief operating officer, in a March 15 presentation at Bank of America's 2006 Consumer Conference.
``It's really about efficient and effective cost planning combined with solid, balanced top-line growth that's going to allow us to win in the marketplace,'' Foss added.
Pepsi operates 45 plants in the United States and 98 worldwide, producing and selling more than 1.5 billion cases of beverages each year, according to its Web site.
The project is aimed at making bottles to satisfy sales growth in club stores, according to bottle supplier Constar International of Philadelphia.
Pepsi will install the machines at four separate locations, though none has been disclosed.
It's a trend among bottlers that will gain steam, according to packaging sector observers. They cited higher costs for transportation and raw materials as reasons companies like Pepsi are integrating. In the current environment, 75-85 percent of product cost is packaging.
``One of our major water customers has taken 30 percent to 40 percent of their business in-house,'' said Michael Hoffman, Constar president and chief executive officer, in his firm's March 24 conference call announcing 2005 results.