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November 16, 2011 - 4:43pm

Likely buyer for 'Project Wave' plant is PepsiCo

posted by Howard B. Owens in batavia, business, Genesee Valley Agri-Business Park.

A pair of top executives from the company behind a development in the Genesee Valley Agri-Business Park in Batavia were on hand this morning to see the first of several tons of dirt get moved from one spot to another.

Even without a purchase agreement to buy the 81-acre parcel from GCEDC, the company is apparently eager to get this project under way immediately to meet a deadline for product production of early 2013.

The company wants site grading completed before the worst of winter hits.

While the executives did not want to be identified in publication, sources in the dairy industry have fingered PepsiCo as the company likely behind "Project Wave."

It makes sense.

According to a story in the Oct. 14 edition of the Wall Street Journal, Pepsi is embarking on a partnership with a yogurt company based in Germany in an effort to enter the fast-growing yogurt market in the United States.

This would be Pepsi's first foray into the U.S. dairy business, but fits an overall strategy laid out in the business press for Pepsi to grow market share in nutritional foods as the market for soft drinks declines.

The Jacksonville, Fla.-based firm that has led Project Wave through the regulatory process and start of construction is Haskell Architects and Engineers. On its website, Haskell lists PepsiCo as among its clients.

While the executives at the construction site this morning asked that their names not be published, an internet search of one of the executive's names confirmed he is an employee of PepsiCo.

The executive made it clear, however, that Batavia is only one site among four under consideration and his employer hasn't made a final decision on which site it will construct its plant.

It is, however, the site that is being bulldozed. And the company seems eager, and has big plans, to enter the U.S. yogurt market by 2013.

According to Project Wave specs, the plant will eventually employ 600 people working three different shifts on 16 production lines.

Assuming it opens on schedule in 2013, the plant will initially employ 180 people working on three production lines.

Both executives praised GCEDC and the Town of Batavia for having this shovel ready site available.

"There are only three of our four sites in the northeast that would be ready this quickly for production," one executive said. "These shovel-ready projects are key to attracting big companies."

Mike Wheeler, the project's architect, was also on site this morning and reiterated the importance of having all of the regulatory approvals in place, along with the infrastructure necessary for the project to get started right away.

"My hats off to these guys," Wheeler said. "They put the community in the best possible position for this project."

Lori Silvernail
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Last seen: 5 years 2 weeks ago
Joined: Oct 22 2009 - 4:59pm

Believe it or not, that was going to be my guess. Their logo was known as the wave and they do have foods as well. But the one poster spoke of the other place so positively I figured he had insider information! Good for PepsiCo!

ETA: It doesn't really matter WHO builds it, it's the fact that they're coming HERE that is the bottom line. I'm glad to see a huge company like that come to our little city :-)

Howard B. Owens
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We should have had a pool .. or at least a poll.

Mike Weaver
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I guess everyone is going to have to start throwing stones at PepsiCo now.

Jack Dorf
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Yeah god forgive if certain people ever see the positive in what is going on instead of always finding something to bitch about.

Jeff Allen
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Joined: Jun 5 2009 - 4:17pm

Pepsi could make a great start by offering hiring preferences to those that lost their jobs when they bought and then closed the bottling operation on Main St.

Stephen Smelski
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Don't get to excited yet. They all keep saying, "this isn't a done deal yet".

Frank Bartholomew
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Jeff, thats a common practice in business, the same happened to the beverage plant in Oakfield, Cott Distributors bought the operation for a song, and 5 years later closed the plant, despite record production at that plant.
Cott was shipping used equiptment, outdated extracts, basically anything they could put on the books to write off later, into the Oakfield facility. I heard estimates of 1.5 mil. as the price paid when Cott purchased the operation. I also heard Cott wrote almost 30 mil off from that operation. That's a nice chunk of change for a five year investment.

Lorna Klotzbach
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Who is paying for the bulldozing and site preparation if the company hasn't even decided to come here yet? Will this come out of Steve Hyde's $50,000 bonus for this year? Or will it come out of Genesee County tax dollars? Use our tax dollars wisely to support local industries and businesses. Give the local people, who provide the most economic stimulus according to the experts, the tax breaks and subsidies to expand and remain in upstate New York. Use the tax dollars the state takes from us to reclaim the abandoned industrial parks in the Buffalo and Rochester metropolitan areas instead of leaving them blighted--and destroying more of our farmland and wildlife habitat. (Yes, I chose the emotive word "destroying" on purpose because that is what happens to "developed" farmland and wildlife habitat. The transportation, electricity, gas lines, water lines, sewage disposal facilities and, even buildings, already exist in those areas. That would be a good way to "reduce, reuse, and recycle" our state's resources. (FYI--New York State requires that we teach our school children to reduce, reuse and recycle!)

Mark Potwora
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Lorna you make some great points.good question..Who does pay for all the site prep..At least we know that its PepsiCo..interested in coming here
and that they make great profits ..Their stock pays great divides so they shouldn't need any tax breaks to build here..or corporate welfare as they call it..Glad to see them come here and create jobs.......

Bob Harker
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Lorna, although I disagree with much of your comment - I'm glad to see business come to Batavia - you nailed it on the who is paying for the site work being done.

Nothing on paper yet, but big money is being spent. That has to be our money. I don't care how "confident" Mr. Hyde & company (pun intended) are that this deal will come to fruition, spending money on this with no written commitment is ludicrous. If by some small chance this falls through, taxpayers will be ripped off yet again and Hyde will still be enjoying his perks.

We also know of GCEDC's propensity for pie in the sky employment projections. I hope this one is somewhat close to realistic.

Howard B. Owens
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The prospective buyer of the property, which we now know to be PepsiCo, is paying all construction costs.

There is currently no agreement in place for a sales tax exemption, but I can assure you that will come. There will also be a PILOT and mortgage tax exemption. That's standard fare in these developments, so while I have no confirmed information on that front, it would be shocking if such wasn't the case. It would be unheard of.

I wouldn't be surprised to see Albany cough up some additional incentives.

I suspect that's the main reason Pepsi hasn't officially committed yet -- they want the best deal they can get, but at the same time, it's critical to their strategic initiative to get yogurt production started as soon as possible, so they're in a position were they need to begin construction even though they haven't settled on terms.

bud prevost
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Chamber of Commerce should change the slogan to " Batavia, NY...Yogurt City USA".

C. M. Barons
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...So Pepsi will be competing with Alpina for yogurt marketshare?

Bob Harker
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So you're saying that a successful powerhouse like PepsiCo is the one taking a financial risk without a guaranteed outcome??!! Not taxpayers?!?

The only way I can see that happening is "stimulus" or "incentive" money is so easily obtainable, it is viewed as an entitlement by the private sector.


Bea McManis
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Will the small dairy farms benefit from the two new plants? I've attended several dairy hearings and one of the concerns is the cost of milk production vs the price paid by the processors. Getting the milk to the processor is the responsibility of the farmer. Most likely the large corporate dairies will be okay, but is there a niche for the smaller dairies?

From the Farm to the Processing Plant (The cost of getting the milk to the processors)
To provide the safest and highest quality product to the consumer, the Pasteurized Milk Ordinance (PMO, 2005) provides standardized guidelines. The PMO is a document from the United States Departments of Health and Human Services and Public Health, and the Food and Drug Administration that defines practices relating to milk parlor and processing plant design, milking practices, milk handling, sanitation, and standards for the pasteurization of Grade A milk products.
Milk is obtained from the cow (or goat, sheep, or water buffalo) under sanitary conditions and cooled to 45°F (7°C) within 2 hours of milking. Milk is picked up by a handler who takes a sample and then pumps the milk from farm's bulk tank into the milk truck. A handler may pick up milk from more than one farm, so a truck load may contain milk from several farms when it is delivered to the processing plant. Before the milk can be unloaded at the processing plant, each load is tested for antibiotic residues. If the milk shows no evidence of antibiotics, it is pumped into the plant's holding tanks for further processing. If the milk does not pass antibiotic testing, the entire truck load of milk is discarded and the farm samples are tested to find the source of the antibiotic residues. Regulatory action is taken against the farm with the positive antibiotic test. Positive antibiotic tests are rare, and account for far less than 1% of the tank loads of milk delivered to processing plants.

Processing Steps in Yogurt Production:
1. Adjust Milk Composition & Blend Ingredients
Milk composition may be adjusted to achieve the desired fat and solids content. Often dry milk is added to increase the amount of whey protein to provide a desirable texture. Ingredients such as stabilizers are added at this time.
2. Pasteurize Milk
The milk mixture is pasteurized at 185°F (85°C) for 30 minutes or at 203°F (95°C) for 10 minutes. A high heat treatment is used to denature the whey (serum) proteins. This allows the proteins to form a more stable gel, which prevents separation of the water during storage. The high heat treatment also further reduces the number of spoilage organisms in the milk to provide a better environment for the starter cultures to grow. Yogurt is pasteurized before the starter cultures are added to ensure that the cultures remain active in the yogurt after fermentation to act as probiotics; if the yogurt is pasteurized after fermentation the cultures will be inactivated.
3. Homogenize
The blend is homogenized (2000 to 2500 psi) to mix all ingredients thoroughly and improve yogurt consistency.
4. Cool Milk
The milk is cooled to 108°F (42°C) to bring the yogurt to the ideal growth temperature for the starter culture.
5. Inoculate with Starter Cultures
The starter cultures are mixed into the cooled milk.
6. Hold
The milk is held at 108°F (42°C) until a pH 4.5 is reached. This allows the fermentation to progress to form a soft gel and the characteristic flavor of yogurt. This process can take several hours.
7. Cool
The yogurt is cooled to 7°C to stop the fermentation process.
8. Add Fruit & Flavors
Fruit and flavors are added at different steps depending on the type of yogurt. For set style yogurt the fruit is added in the bottom of the cup and then the inoculated yogurt is poured on top and the yogurt is fermented in the cup. For swiss style yogurt the fruit is blended with the fermented, cooled yogurt prior to packaging.
9. Package
The yogurt is pumped from the fermentation vat and packaged as desired.

Frank Bartholomew
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Last seen: 9 months 2 weeks ago
Joined: Apr 4 2010 - 8:02pm

Bea, you left out the most important part; 10.The finished yogurt is stored in a refrigerated warehouse awaiting customer orders, and then shipped to market.11. The product is then put on shelves in stores, purchased by consumers, and finally consumed, yummy.

Bea McManis
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Last seen: 4 years 8 months ago
Joined: May 4 2009 - 9:20pm

...and the dairy farmer pays almost twice for the final product than received for the base product. It would be nice if the two plants would start a business model that takes the burden of shipment of the raw product to the processing plant.
just saying.

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