PepsiCo to focus on modern trade for next generation customers

To sustain the profitability momentum, PepsiCo India will focus on market execution and invest heavily on trade channels, including e-commerce.The maker of Pepsi cola and Lay’s salty snacks, which returned to profitable growth after a gap of seven years in financial year in 2017-18, is ‘seeking ways to move ahead of the existing growth numbers’, said company president Sheikh, who now completes a year as PepsiCo’s first expat chief executive in the country. 

He said besides market execution, the challenge for the soda and snacks maker is to execute for the ‘next league of customers’. “I think there is growth but it is getting more complex. The consumer is transforming. E-commerce, modern trade, offline, and online. How we can balance all of it.” 

Mirroring global trends, in India too, category growth of its core soft drinks business has been under pressure, with rapidly changing consumer preferences for healthier drinks. PepsiCo competes with Coca-Cola, Dabur, ITC and Parle across diversified categories, including carbonated soft drinks, juices, and salty snacks. 

Quaker Oats is its fastest growing brand though on a low base, and that it is growing share, revenue and portfolio. 

The latest filings with the Registrar of Companies (RoC) show PepsiCo’s net profit of Rs 190 crore in 2017-18, against a loss of Rs 148 crore the previous year in 2016-17. The last time it had reported profits was in 2010-11. Its turnover, however, declined 7% in 2017-18 to Rs 5,983 crore, though net sales are not comparable as turnover in the last fiscal was calculated net of the Goods & Services Tax (GST). 

It raised advertising and promotion spends 15.7% over the previous financial year, to support existing products and new launches. The company said Lay’s, Kurkure, Quaker and Doritos were its key growth drivers. 

“India is a formula one market; it’s the engine of growth of the world. So our role is to move ahead, and see what we can do to grow higher than 10%,” he said. 

In the July-September ’18 quarter, the New York company said it saw ‘strong double-digit organic revenue growth’ from India and other Asia-Middle East and North Africa (AMENA) markets. While the AMENA zone showed 17% growth in profit, it grew 7% in volume in foods and 2% in beverages.