PepsiCo bullish on India, increases investment at snacks plant in UP to Rs 814 crore

Food and beverages major PepsiCo is “extremely optimistic” about the future of the Indian market despite short-term headwinds due to pandemic-related disruptions and increasing investment at its new greenfield snacks plant in Uttar Pradesh to Rs 814 crore to meet increasing demand, according to its India President Ahmed ElSheikh.

The company is committed to double its business from snacks business in India and also increasing the capacity of existing food plants in West Bengal and Maharashtra, and it has additionally proposed to set up a greenfield manufacturing facility in Assam.

“While there have been some short-term headwinds due to COVID-19, we at PepsiCo are extremely optimistic about the future and are committed to provide consumers the right portfolio of products across food and beverages,” ElSheikh told PTI.

PepsiCo India has emerged as one of the largest food and beverage companies in the country in 30 years of its establishment in India and is looking to build further, he added.
“Looking ahead, we are committed to double our snacks business in India. In fact, we have increased our investment in our new greenfield snacks plant in Uttar Pradesh from Rs 500 crore to nearly Rs 814 crore, generating 1,500 direct/indirect jobs and enabling a local sourcing ecosystem,” ElSheikh said.

India consumption story has just started and according to industry reports, India will be the third-largest consumption market by 2025, he said.

As the festive season begins, the company expects an enhanced demand from categories like snacks, juices and other carbonated beverages led by the sentiment of celebration.

“From an FMCG point of view, the industry is seeing consumption revival, which we expect will only get better with further unlocking and the upcoming festive season,” ElSheikh said.

Commenting on consumer trends, ElSheikh said ‘in-home consumption’ is witnessing a significant uptake and consumers are seeking convenience along with the value.

“As people adjust to the ‘new normal’, in-home consumption is witnessing a significant uptake. There is a growing demand for our larger packs as in-home occasions of togetherness have increased manifold. While the consumers are looking at in-home experiences and seeking convenience, they are also looking at value,” ElSheikh said.
He, however, said, “Affordability is key today.”

PepsiCo has introduced 1.25-litre PET pack in its beverage portfolio at a very affordable price of Rs 50 targeting the ‘in-home consumption’ and introduced various combo packs in food portfolio.

While, in the smaller packs, it has also strategised price points to meet both rural and urban demand.

“With the Indian FMCG industry slowly showing signs of revival in COVID impacted world, we have adapted quickly and re-strategised our price-pack programmes, enhanced consumer engagement initiatives and doubled down attention on both B2C and B2B distribution models to meet consumer demand,” he said.

According to a recent RoC (registrar of companies) filing by PepsiCo India, its profit after tax in FY 2019-20 increased to Rs 329 crore from Rs 36 crore in FY 2018-19.

Though its revenue was down 15.87 per cent to Rs 5,264 crore compared to Rs 6,257 crore in FY 2018-19 on account of refranchising the remaining bottling operations in south and west India to its bottling partner Varun Beverages Ltd.

“PepsiCo India’s transformation journey remains on track — third successive year of profit in FY 2019-20 which has been all about building ‘a faster, stronger, better company’ in India,” he said.

Though its overall beverage volume grew during the FY 2019-20, its beverage revenue was lower on account of refranchising and impact of COVID-19 in the last fortnight of March 2020. Its food revenue grew due to strong growth in Lays, Kurkure portfolio and Doritos.

“Focus on the core brands yielded results with growth across the portfolio namely Lay’s & Kurkure portfolio, Lay’s Maxx and Doritos. Similarly, Core brands drove beverage growth, led by Pepsi, Mountain Dew & Slice,” ElSheikh said.

Last week, in its global Q3 results, PepsiCo had reported organic revenue growth in some international markets including India.

“Within our international markets, developed market organic revenue growth increased 8 per cent and outpaced developing and emerging markets which increased 2 per cent,” PepsiCo’s chairman and CEO Ramon Laguarta had said on October 1, 2020.

Some notable highlights include double-digit organic revenue growth in France, Australia, and Brazil, high-single-digit growth in India and mid-single digit growth in the UK, China and Russia, he said.