V-ECON Audit: PepsiCo

Supply Chain & Sourcing Relationships

Direct Israeli Supplier Relationships

No public evidence has been identified of PepsiCo holding direct verified procurement contracts with named Israeli agricultural exporters for produce categories such as Medjool dates, avocados, citrus, herbs, or potatoes. PepsiCo’s core product lines in the Israeli market are beverages, snacks, and home carbonation equipment – fresh produce procurement is not a feature of its business model in this geography ¹².

Licensed Bottling & Distribution: Strauss Group Partnership

PepsiCo’s primary commercial presence in the Israeli beverage market operates through a licensed bottling and distribution partnership with Strauss Group, Israel’s second-largest food and beverage company. Strauss Group holds the license to manufacture and distribute Pepsi-Cola branded beverages within Israel under a joint venture arrangement historically branded as Pepsi-Cola Products Israel ³. As Strauss Group is an Israeli-domiciled public company listed on the Tel Aviv Stock Exchange, Strauss Group – not PepsiCo directly – functions as the operative commercial entity for Pepsi-branded beverages in Israel ³.

SodaStream International Ltd. (Wholly-Owned Subsidiary)

PepsiCo completed the acquisition of SodaStream International Ltd. in December 2018 for approximately USD 3.2 billion ($144 per share), representing a 32% premium to the 30-day volume-weighted average price ¹. SodaStream is incorporated in Israel and operates as PepsiCo’s most direct Israeli-domiciled corporate holding, manufacturing home carbonation equipment and CO₂ cylinders distributed globally. This constitutes an active and ongoing supply chain origination point within Israel proper (post-2020) ¹².

Settlement-Based Supply Chain (Historical)

Prior to July 2015, SodaStream operated a manufacturing facility in Ma’ale Adumim, an Israeli settlement in the West Bank (Area C). This facility was the primary production site for SodaStream hardware and CO₂ cylinders distributed to global markets during the period between 1997 and 2015 ²⁴. Who Profits conducted a field verification visit on December 1, 2015, confirming the Mishor Adumim factory ceased operations. The company relocated to the Lehavim plant in the Negev ⁴. SodaStream received a 25 million shekel ($7 million) government grant from the Israeli government for the Negev relocation, provided under the “Encouragement of Capital Investment” law for peripheral area investments ⁴.

Seasonal & Indirect Sourcing

No public evidence has been identified of PepsiCo engaging in counter-seasonal fresh produce procurement from Israeli agricultural suppliers, nor of Israeli-origin produce or agricultural products reaching PepsiCo-branded products via white-label or reseller arrangements. This is consistent with PepsiCo’s product profile (processed beverages and snacks, not fresh produce retail) ².

Product Origin, Labeling & Regulatory Compliance

Settlement-Origin Products (Historical, Pre-2020)

The primary Israeli-origin product distributed under PepsiCo ownership was SodaStream home carbonation equipment and CO₂ cylinders. From the completion of the PepsiCo acquisition (December 2018) until January 2020, these products were manufactured at SodaStream’s Ma’ale Adumim factory in the West Bank and distributed to global markets. However, the Ma’ale Adumim facility had already closed in July 2015, prior to PepsiCo’s acquisition ²⁵⁴. The OHCHR business database (published February 2020, covering activities up to 2018) did not list SodaStream, as the West Bank operations had already ceased by that time ⁶.

Relocation to Israel Proper (Post-January 2020)

SodaStream closed the Ma’ale Adumim facility in July 2015 and opened a replacement manufacturing plant at Lehavim, in the Negev desert within Israel’s pre-1967 borders. The facility at Idan HaNegev Industrial Park became operational in 2015 ⁵⁴⁷. Post-relocation, SodaStream manufacturing is no longer based in occupied territory ⁵⁴.

Labeling Compliance

No documented regulatory citation, enforcement action, or government advisory has been publicly identified specifically naming PepsiCo or SodaStream as non-compliant with UK or EU settlement-origin labeling rules in the post-2015 period ⁶.

Corporate Labeling Policy

No publicly stated PepsiCo corporate policy specifically addressing the sourcing or labeling of goods from occupied or contested territories has been identified in PepsiCo’s Sustainability Reports or proxy statements ⁸.

Investment, Capital & Financial Exposure

Foreign Direct Investment

PepsiCo’s single largest direct capital investment within Israel is the acquisition of SodaStream International Ltd., completed in December 2018 at a transaction value of approximately USD 3.2 billion ¹. SodaStream is incorporated in Israel and retains manufacturing, R&D, and headquarters functions there as a wholly-owned PepsiCo subsidiary. The Idan HaNegev manufacturing plant represents continued fixed capital investment in Israeli productive infrastructure ¹⁴⁷. In November 2024, PepsiCo acquired Strauss Group’s 50% stake in the Sabra Dipping Company for $244 million (NIS 891 million), making Sabra a wholly-owned subsidiary. Strauss retained an option to acquire a 2.5% stake in PepsiCo’s Israeli salty snacks business ⁸⁹.

R&D and Innovation Centres

SodaStream operates its global R&D and product development functions from its Israeli headquarters at Gilboa Street, Airport City, near Ben Gurion International Airport ¹⁰. No separately branded PepsiCo innovation lab in Israel distinct from SodaStream’s existing R&D operations has been confirmed in public sources ¹⁰.

Parent & Beneficial Ownership

PepsiCo, Inc. is incorporated in North Carolina, USA, headquartered in Purchase, New York, and publicly traded on NASDAQ (ticker: PEP) ⁸. Major institutional shareholders include Vanguard Group, BlackRock, and State Street. No Israeli state entity, Israeli sovereign wealth fund, or Israeli-domiciled entity holds a disclosed controlling or significant beneficial ownership stake in PepsiCo ⁸. No private equity sponsor and no dual-class share structure tying governance or ownership to Israeli interests has been identified ⁸.

Portfolio & Fund Exposure

No public evidence has been identified of PepsiCo’s parent-level treasury holding Israeli sovereign bonds, Israeli-domiciled company equity (other than through the wholly-owned SodaStream subsidiary), or Israel-focused investment funds ⁸.

Operational Presence & Market Activity

Physical Footprint

SodaStream headquarters is located at Airport City (near Ben Gurion International Airport), Israel, operational as of 2024 ¹⁰. The SodaStream Lehavim manufacturing plant is situated at Idan HaNegev Industrial Park, Lehavim, Negev, Israel (within pre-1967 borders), operational from 2015 ⁴⁷. Pepsi-Cola branded beverages are manufactured and distributed by Strauss Group from Strauss-owned Israeli production facilities under license. These facilities are not PepsiCo-owned assets ³. Modern Group (MGBBC) operates a PepsiCo franchise bottling facility in Jericho, West Bank, serving 2.5 million customers in the West Bank area. The 10,000 SQM facility has can and PET lines with production capacity of 60 million liters annually. Approximately 200 employees ¹¹¹².

Employment

SodaStream employed approximately 500 Palestinian workers at the Ma’ale Adumim facility prior to closure. After relocation, 74 Palestinian workers continued working at the Lehavim plant until February 2016, when work permits were not renewed ¹³. Current SodaStream workforce is approximately 1,400 in the Negev, with one-third being Bedouin Arabs ⁷. Modern Group employs approximately 200 workers at its Jericho facility ¹².

Market Positioning

PepsiCo does not identify Israel as a named strategic growth market or regional hub in its public annual reports or investor presentations. Israel is not separately broken out as a reporting segment; it falls within the broader AMESA (Africa, Middle East and South Asia) segment ⁸.

Corporate Structure & Foundational Ties

Founding & Incorporation History

PepsiCo, Inc. was not founded in Israel. It was formed through the 1965 merger of the Pepsi-Cola Company (founded 1898, North Carolina) and Frito-Lay, Inc. ⁸. SodaStream, as a PepsiCo subsidiary, carries distinct heritage: originally founded in the United Kingdom in 1903, acquired by Israeli interests, reincorporated as an Israeli company, and listed on NASDAQ in 2010 before PepsiCo’s 2018 acquisition ¹².

Headquarters & Legal Domicile

PepsiCo, Inc. is legally domiciled in North Carolina, USA; operational headquarters at 700 Anderson Hill Road, Purchase, New York 10577, USA. No dual or Israeli headquarters exists for the parent entity ⁸. SodaStream International Ltd. maintains operational subsidiary headquarters at Gilboa Street, Airport City, Ben Gurion Airport, 70100, Israel ¹⁰.

State & Institutional Linkages

No evidence has been identified of Israeli state ownership of PepsiCo or SodaStream, Israeli government board appointees at either entity, or designation as critical Israeli national infrastructure ⁸. SodaStream is recognized in Israeli economic press as a significant industrial and export brand but no formal government designation has been confirmed ⁴.

Structural Governance Features

PepsiCo has no golden shares, founder shares, or charter restrictions tying its governance to the Israeli state. Standard US public company governance applies ⁸.

Profit Repatriation & Economic Contribution

Revenue Attribution

PepsiCo does not disclose Israel-specific revenue in its segment reporting. Revenues are reported at geographic segment level (Europe, Latin America, AMESA, APAC) ⁸. The AMESA segment generated approximately $6 billion revenue in 2023; Israel falls within this region but no country-specific breakdown is provided ⁸.

Profit Flows

PepsiCo is a US-domiciled parent. Profits generated by SodaStream’s Israeli operations flow upward to PepsiCo, Inc. (Purchase, NY, USA) as the 100% beneficial owner of SodaStream International Ltd. This represents outward profit flow from Israel to a US parent ¹⁸. Under the Strauss Group licensing arrangement, Strauss Group retains profits from Pepsi-branded beverage sales within Israel, with royalty or licensing fees flowing outward to PepsiCo ³.

Economic Ecosystem Role

SodaStream is regarded in Israeli business press as a significant Israeli industrial export brand, with the Lehavim plant functioning as one of the larger manufacturing facilities in the Negev region ⁴⁷. Modern Group serves 2.5 million customers in the West Bank, making it a significant local distributor but not a corporate subsidiary of PepsiCo ¹¹¹².

End Notes