PepsiCo is facing a flood of exits in India. In the past 3-4 months, about 15 senior to mid-level executives have left the beverages major that makes Pepsi and 7Up sodas, Tropicana juices, Gatorade sports drink and Kurkure and Lays salty snacks.
“Soft drinks as a category is slowing down, the organisational structure is undergoing change, with decision making increasingly moving out of the country to its headquarters in New York. Also, increasing possibilities of franchising are leading to employees moving out,” a top official directly aware of the developments said.
Individual employees exiting junior to mid-level from different functions is normal for leading organisations our size, and we believe that some attrition is good for the company. PepsiCo has a lower rate than the average rate of attrition in the FMCG industry in India, with less than 5% in senior management and less than 15% in mid to junior level.
In February, PepsiCo CEO Indra Nooyi had said at a post-earnings call that the company is open to refranchising wherever it finds a bottler that can run the business better. “Internationally, when we find a very good bottler and we believe that they can run the business better than us, we will refranchise the business,” She responded to an analyst’s query about whether PepsiCo had such plans for bottling operations in India.
“We look across our portfolio internationally to see where it makes sense,” she had added.
RJ Corp has already said it is keen on acquiring the franchising rights of the beverage maker in India that it doesn’t already own, if the company so decides.
RJ Corp, through group company Varun Beverages, owns PepsiCo’s bottling franchisee rights across 20 Indian states and two Union Territories. PepsiCo also has a tie-up with Varun Beverages to distribute its Tropicana juices, Gatorade drinks and Quaker Oats.
Consumer preference for healthier, lowsugar or functional drinks including packaged juices and juice drinks, flavoured water and ethnic flavours has led the organised soft drinks industry to report lower sales, putting market shares under pressure.
There is also increasing threat from about 200 B-brands that compete with organised players on lower prices and hyper-localised flavours.
According to available industry data, regional brands make up more than 15% share of the estimated Rs 22,000-crore soft drink category.