India will be the “engine of growth for PepsiCo” in driving its global revenue, as it ranks among the top three markets for the food, snack, and beverage multinational, where the company is experiencing double-digit growth, Kotecha shared in an exclusive interview with PTI.
PepsiCo has invested in greenfield plants in Uttar Pradesh and Assam, focusing on staying ahead of the demand curve, Kotecha said, adding the company will not be “investment shy” in India and plans to open two more facilities, including one in the southern region.
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“We believe India will be the engine of growth for PepsiCo to drive the top line. Yes, it’s not as big as North America because it is a lot more evolved category. Our per capita consumption in India is still very low, not only for us on beverage and food, but we would expect one of PepsiCo’s fastest growing economies to do that,” Kotecha said.
Currently, India ranks among the top 15 markets globally for PepsiCo. However, Kotecha expects the country to move up the ranks, though he refrained from sharing any specific projections.
India is one of the “key anchor markets” for the New York-headquartered food, snack, and beverage multinational, where it re-entered in the 1990s after a gap of 28 years.
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“We have identified about 13 to 15 anchor markets for PepsiCo, of which India is there and the definition of anchor markets is where do we see our next five to seven years of incremental growth coming for PepsiCo globally and India being one of that,” he said. According to Kotecha, PepsiCo “sits very well” within the Prime Minister’s vision of 2030, being the top three economies in the world.
“It’s one of the most stable economies, growth engine, etc and hence, PepsiCo also has been in this country for almost 30 years, good, strong, fundamentals,” he said, adding, “So, we need to double that, dial that up and start investing. We have been investing but continue to aggressively invest to ensure that we also take that opportunity.” PepsiCo is working on three strategic pillars, which it calls it “faster, stronger, better”. The company has divided India into nine clusters based on taste preferences. Moreover, it is also ensuring to be planet-conscious with sustainable solutions and building capabilities.
PepsiCo last month reported a double-digit organic revenue growth in India with gains in market share in savoury snacks and beverages.
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When asked about the timeline for achieving $2 billion (around ₹17,000 crore) revenue in the Indian market, Kotecha said: “It’s a vision. (We have) Aspiration to reach there, if we get everything right with the India infrastructure, I think it is there to take.” “So, we are about over ₹5,950 crore in 2023 (for nine months due to change in fiscal year) and since then we have been growing double digits from there. And if we continue to do that. So, that’s where we are looking at what our numbers should be by that time,” he added.
In 2023, PepsiCo had moved to a Calendar year as the financial year in sync with its global results. Hence, in 2023, it reported revenue of around ₹5,950 crore for the April to December period. Cumulatively, after adding the rest of the January-March quarter based on previous year revenue, it would be extrapolated to around ₹8,200 crore.
Besides PepsiCo’s bottler Varun Beverages, which gets 90% beverage sales volume of PepsiCo India, had reported a standalone revenue of ₹
12,778.96 crore in 2023.
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Over the investments, Kotecha said PepsiCo has set up a green field plant near Mathura in UP and is going to start a new one in the North East at Assam by the end of this year.
“The second one is in MP, which we have set up. Which again tells you where we are. We had built our Kosi plant about two or two and a half years ago, which we keep expanding. We have plans to open up in other parts of the country as part of that. So, we are not going to be investment shy. We are going to be investing forward to drive that growth because it is there for us to capture the (market),” he said.
In the last three years, PepsiCo has invested close to ₹3,500-4,000 crore in the Indian market.
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Besides, PepsiCo’s bottling partner Varun Beverages Ltd (VBL) is also investing significantly.
“They have 41 plants. They have just invested in capacities, increasing by 25% this year. They are continuing that type of investment to grow with us. Our partnership is pretty strong to enable that growth. Both of us feel very good about this,” said Kutecha.
When asked about the entry of a new player Reliance’s Campa Cola, which is disrupting the beverage market with its aggressive price points and increased margin to the distributors, Kotecha said that it is always good to have competition. Competition only helps to grow the category. “Our view is, yes, even before Pepsi and Coke were there, there were a lot of local, regional players,” he said, adding “Now Campa has also come with a lot of flair and expense and all. So our belief is the category will then grow and the consumption will grow.” This will also help a lot of people to shift from unpackaged, unbranded into this category. Still per capita consumption is “far less”, which is even lower than our neighbours such as Pakistan.
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“We have to play to our strengths. And again, embedding everything that we do is consumer-centric, understanding the consumer and what their needs are, and play that game and play to our strengths,” he said, adding “Somebody else will come and play with a slightly different strategy and play to that strength. So that’s where we see. So we see it will be good for the consumer and it will be good for the market.” It operates in the beverages segment with fizz brands as Mountain Dew, 7up, Pepsi, and energy drink Sting and sports beverages Gatorade, while in juices it has Tropicana and Slice brands.
PepsiCo operates with Kurkure, Lays, Quaker and Doritos.
In 2023, PepsiCo India’s around 80% revenue was from the food and the rest 20% from the beverages segment, as the business is taken care of by its partner VBL.
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The Indian beverages market is valued at around $12 billion and is growing with a CAGR of 10-11%.
