Romanian potatoes for PepsiCo’s Lay’s to be grown under European Green Deal standards

22-Feb-2022 - Last updated on 22-Feb-2022 at 10:48 GMT

The smart irrigation system will reduce water usage by 50%. Pic: Yuji Sakai

Following an extension of its partnership with the snack giant, Grup Serban Holding (GSH) is investing in a state-of-the-art irrigation system that slashes water and energy consumption, along with the use of fertilizers and pesticides.

PepsiCo Romania has extended its partnership with the Romanian agricultural concern for the potatoes needed for Lay’s chips produced in the country. This is the third year of collaboration between PepsiCo and GSH, which will float shares on the Bucharest Stock Exchange on 28 February 2022.

“Potato chips represent a niche for Romanian agriculture,” said Ovidiu Bucătaru, GSH’s chief financial officer.

“Grup Șerban is already entering the third year of collaboration with PepsiCo, confirming our production’s excellent quality and compliance to the highest international standards in this field. Signing this contract means improving the financial performance in the medium term, considering the predictability and evolution of capitalisation prices.

“The production of potatoes for industrialisation contributes to the increase of the group’s turnover and, therefore, the profit and cash flow, bringing an income of RON 50k ($11.4k) per ha.

“One hectare of potato chips generates the same income as four hectares of cereals or oilseeds. Also, with the renewal of this collaboration, we plan to shorten the supply chain by adding storage services for 35% of production.”

EU Green Deal aims to provide path to sustainability

To increase production capacity for this intensive crop, GSH is investing in a smart irrigation system that has been developed under the European Green Deal. Irrigation is carried out by dripping, a method that reduces water consumption by half, along with energy costs by 30%, and fertilizers and pesticides by 50% and 25%, respectively.

The cost of the system is valued at approximately 20,000 lei ($4.58k) per hectare.

Onesti-headquartered GSH was founded in 1994 and is a group of companies involved in agriculture; cereals trading; oil plants and vegetables; poultry; bakery; pastry and confectionery; food service; the Bacanille Serban chain of retail outlets; distribution; and transport.

At the end of 2021, the group raised 12.7 million lei ($3m) from investors in a private placement of its shares. The listing of its shares later this month on the AeRO market of the Bucharest Stock Exchange is expected to raise a further 25-50 million lei ($5.7m-$$11.4m) annually, which the company will use to enter new markets and develop new lines.