COSATU statement on the Pepsico- Pioneer Foods deal

COSATU welcomes the Minister for the Department of Trade, Industry and Competition and the Competition Commission’s intervention and engagement with PepsiCo to ensure that workers are protected during its acquisition of Pioneer Food.

Workers have borne the brunt of previous private sector acquisitions. Often these deals have led to large scale job losses, reduction of wages and slashing of benefits. 

They often pose a risk to local manufacturers because they lead to increasing levels of imports at the expense of buying local. The federation is pleased that government’s intervention led to the following key agreements in favour of workers.

“Under the agreement, PepsiCo, Pioneer Foods and Simba have together committed the following:

•        Regional Integration and exports: To locate PepsiCo’s Sub-Saharan Africa Head Office in South Africa, and to increase the presence and sales of Pioneer Foods products throughout Africa and internationally.

•        Employment: To maintain the current number of jobs in Pioneer Foods and Simba (covering ±10 000 employees) for a period of five years from closing, and not to retrench employees as a result of the merger at any time in the future. In addition, PepsiCo has committed to increasing employment in Pioneer Foods and Simba by 500 jobs and will further increase jobs in companies in the supply chain of Pioneer and Simba by 2 500 within five years, unless conditions prevent the planned growth strategy of the company.

•        Investment: To invest R6.5 billion in the productive assets of Pioneer Foods over the next five years to maintain and increase the levels of production, R5.5 billion of which is guaranteed irrespective of the macroeconomic environment, and a further R1 billion committed unless conditions prevent the planned growth strategy of the company.

•        Localisation: to maintain and increase the proportion of locally produced key agricultural products used by Pioneer Foods and Simba to produce their products. The company will further replace imported oils with locally produced vegetable oils as it becomes commercially viable, and will use best endeavours to replace imported packaging with locally manufactured packaging.

•        Supplier Development: to establish a R600 million development fund which will be used in part to expand the number of black farmers in Pioneer Foods and Simba’s supply chain; to support research and development at South African universities in agro-sciences and provide scholarships to black South Africans in engineering, agro sciences and nutrition; and invest in South African entrepreneurs through an incubator program; and

•        Broad-based Worker Empowerment: to establish a Workers Trust for the benefit of employees in Pioneer Foods and Simba, which will receive R1.6 billion in PepsiCo Inc shares (listed in the US) as a donation within 12 months, and after a period of five years be used to allow the Workers Trust to acquire a shareholding in Pioneer Foods of up to 13%. The Workers Trust will have board representation on the board of Pioneer Foods, elected by employees of Pioneer and Simba.”

COSATU hopes that PepsiCo will honour its obligations and not renege on them.  The federation will keep a close eye on the full implementation of the agreement.Other companies should take note of the agreement and engage with their employees on similar progressive objectives.

Issued by COSATU
 Sizwe Pamla (Cosatu National Spokesperson)

Tel: 011 339 4911
Fax: 011 339 5080
Cell: 060 975 6794