From Legal Maze to Asphalt: Inside PepsiCo’s Operations in Latin America

In Mexico and Brazil, the food and beverage sector accounts for 7% and 10.5% of industrial inventory, according to SiiLA. But in this industry, moving products isn't just about logistics or space —it's about navigating barriers that lie not in the warehouses or the supply chain but in the broader environment that shapes them.

PepsiCo knows this well. According to Leandro Rovai, the company's Head of Knowledge Management Global, the most significant challenges are the regulatory complexity that varies from country to country, fragile infrastructure, and a lack of stable conditions for long-term operations.

In Mexico, Rovai notes the rapid industrial expansion driven by nearshoring runs up against structural limitations: uneven infrastructure, especially in the country's south; port and rail congestion; bureaucratic disparities between states that slow down permitting; limited access to water and electricity in new industrial hubs; and increasingly strict environmental and ESG regulations that delay projects and raise costs.

In Brazil, the issues differ in form but not in scale. Overlapping jurisdictions among municipal, state, and federal governments create legal uncertainty and slow licensing processes. Add to that a heavy tax burden, frequent shifts in financing and incentive rules, and political instability that erodes operational predictability.

A clear example of what happens when the physical and regulatory environment becomes a bottleneck unfolded in Guatemala, where PepsiCo had to completely overhaul its distribution center in Villa Nueva. Though the site —just southwest of the capital with direct access to major highways— offered logistical advantages, the company had to invest $27 million to upgrade infrastructure, implement advanced logistics systems like voice-directed picking, and build 29 loading docks to ensure continuous product flow.

The case illustrates a broader pattern: in Latin America, operating often means not leveraging what's already there, but building it from scratch. And when that burden is constant, it narrows the margin to scale.

Why? Because building from the ground up —or undertaking major upgrades— requires land, which is often scarce, and above all, capital, vision, and investment guarantees. That threshold alone bars many companies. And even for those that can meet it, the challenge doesn't stop there: the region's macroeconomic conditions present additional hurdles.

For instance, interest rates in Mexico and Brazil —at 8.5% and 14.75%, respectively— increase the cost of borrowing and restrict access to financing. Inflation, exchange rate volatility, and political uncertainty layer on additional risk, directly impacting construction costs, execution, and long-term project viability. "That's why companies must be prepared to adapt quickly to shifts in the macroeconomic environment," Rovai warns.

Yet despite all this, interest in the region hasn't waned —because some forces are stronger than risk. While the environment poses challenges, it also presents opportunities.

In 2024 alone, the regional carbonated beverage market exceeded $60 billion, and according to Informes de Expertos, it's expected to grow at a steady 2% annual rate over the next decade. That scale —more than the conditions— is what keeps global giants in motion. PepsiCo, for example, operates in 34 Latin American countries through some 40 plants and generated over $11.7 billion in net revenue last year —around 13% of its global net income.

But these opportunities aren't evenly distributed. While Latin America concentrates production and consumption, only a handful of countries have turned that advantage into structural capacity. Mexico is the clearest example: its proximity to the United States, a mature industrial base, a solid network of trade agreements like the USMCA, and a more institutionalized investment environment through REITs and PropTech solutions set it apart. Add to that the strategic growth into mid-sized cities like Querétaro and Mérida, which, according to Rovai, "offer better governance and infrastructure planning" and make its appeal as a logistics and industrial hub to rise.

Overall, Latin America has what it takes to grow: market, raw materials, and demand. But without certainty, that advantage dissolves. In this industry, it's not enough to attract investment —you must sustain it. And that only happens when the environment stops being a barrier and becomes an asset.

The challenge now isn't growth —it's structured growth. And in that transition —more complex than expansive— it will become clear who's ready to scale, and who stays where they started.

To learn more about industrial performance in Mexico and Latin America, visit SiiLA REsource or contact us at contacto@siila.com.mx.