Batavia savoring yogurt plant$206 million facility to employ 186 [The Buffalo News, N.Y.]

Aug. 03--BATAVIA -- PepsiCo's push into the yogurt business is starting to materialize in upstate New York.

The cola and snack food giant has partnered with Luxembourg-based Theo Muller Group to create Muller Quaker Dairy LLC. The venture plans to open a $206 million yogurt production plant in the Genesee Valley Agri-Business Park about a year from now, with 186 jobs.

Gov. Andrew M. Cuomo and executives from Muller and Pepsi, including Pepsi Chief Executive Officer Indra Nooyi, attended a plant dedication ceremony Thursday, with the under-construction 363,000-square-foot plant as the backdrop. Construction of the facility -- which will be one of the largest yogurt plants in the country -- is about two weeks ahead of schedule.

The new Muller Quaker venture brings together Pepsi and Muller Group, whose holdings include

a large dairy business. Muller-branded yogurt products from Germany have just begun arriving on store shelves in the Northeast and mid-Atlantic.

Along with generating local employment and investment, the Batavia yogurt plant is expected to be a boon to New York State farmers, since the venture will source its milk supply largely from them.

Cuomo said the state is home to 49 dairy plants and has increased its yogurt production 60 percent in the past six years.

"We're making so much yogurt that we have to make sure we have the milk supply to keep up with the yogurt production," he said.

The Muller Quaker project was heavily courted by regional, local and state economic development officials. Empire State Development is providing $3.3 million in Excelsior Jobs Program tax credits, a $10 million New York State Investment Tax Credit and $1 million from New York State Homes and Community Renewal. Genesee County is providing an estimated $12 million in sales and property tax savings.

Stefan Muller, a Theo Muller Group board member, said the company considered 50 sites for the project before narrowing the field to a handful of choices. He said was impressed that when Muller Group representatives checked out the Batavia site, about 30 local officials were waiting with information about the property and the availability of utilities, with a promise of speedy approvals.

Muller also spoke about the challenges of bringing together two companies that might appear to be unlikely partners, describing them as "the Pepsi universe and the small Muller village." He said top executives from both companies have provided the support necessary to allow the start-up venture to get off the ground quickly.

Pepsi generates net revenues of more than $65 billion, while Theo Muller Group companies' revenues are about $5 billion.

Nooyi, the Pepsi CEO, said extending into yogurt was a "perfectly logical" step for Pepsi, which already has snack food brands under its umbrella. The spoonable dairy market's sales are forecast to grow 150 percent in the next decade, she said.

"New York [State], we're in the sweet spot of the growth," she said. "And yet, the market is largely untapped." Per capita consumption of yogurt in the United States is less than half of that Europe, she added.

The venture unites the distribution capabilities of PepsiCo and the technology of Muller, Nooyi said. "Once this plant is up and running, we can grow this market extremely rapidly."

Cuomo said the selection of Batavia for the yogurt plant illustrates his push to make the state more "business friendly."

"We want business in New York," Cuomo said. "Business is the engine that drives the train, providing the jobs, providing the opportunities, providing the career ladder, providing the revenues to local governments. It's all about making the private sector run well and government partnerning with that private sector."

Cuomo said there will be a yogurt business summit in Albany on Aug. 15, focusing on yogurt producers and the dairy industry to "ensure the state is doing everything it can to facilitate that relationship."

Another yogurt plant, a 43,000-square-foot Alpina Foods facility, is set to open in September in the same business park where Muller Quaker will be located.

Steven G. Hyde, president and chief executive officer of the Genesee County Economic Development Center, said the companies locating in the Agri-Business Park validate a long-term plan.

"Our strategy for a good 10 years has been really to try to bring back manufacturing to our region," Hyde said. "This is 9 1/2 years in the making, this 212-acre shovel-ready site.

"But it really proves that when you truly develop shovel-ready sites that are sculpted with the infrastructure that an industry needs, that we're really competitive in upstate New York."

Three or four other potential projects are also looking at the business park, Hyde said.

Buffalo Niagara Enterprise played a role in bringing the Muller Quaker project to the Western New York, said Thomas Kucharski, chief executive officer.

Part of the information BNE put together for the prospect -- whose identity was a secret early on -- was about the cow population in upstate, to demonstrate the supply the prospect could tap into. BNE also did comparative data about likely competitor states for the project.

Kucharski said a number of economic development partners, including Greater Rochester Enterprise, came together to secure the project. "It was one of those deals where everybody knew their role, worked as a team," he said.

mglynn@buffnews.com

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