As note ban effect wanes, PepsiCo feels good about prospects in India

While the lingering effect of November 2016’s note ban continues to affect some businesses in India, global food and beverages major PepsiCo remains bullish about its growth. 

“India is coming out of a bold demonetisation and now moving towards remonetisation with a good gross domestic product growth. And, we feel good about our business prospects there”, Indra Nooyi, global chairperson and chief executive officer of PepsiCo, on Wednesday said in an investors call after the firm’s quarterly results.

During the October-December 2016 quarter, demonetisation of Rs 500 and Rs 1,000 notes, and the subsequent cash crunch had significantly impacted PepsiCo’s business in the country, Nooyi had said earlier. 

“Our hope is that by the time Q2 (April-June) rolls by, we would be through the bulk of the demonetisation challenges,” she had told investors in February.

While PepsiCo did not reveal its financial performance for India, its food/snacks business grew seven per cent by volume during the January-March quarter in the Asia, Middle East and North Africa (AMENA) region. Its beverages sales expanded three per cent.

According to Nooyi, to cope with “changing consumer preferences”, which reflect a growing shift towards a healthier lifestyle, PepsiCo is transforming its portfolio. Currently, “guilt-free products” such as snacks with low levels of sodium and saturated fat, and beverages with less than 70 calories, account for 45 per cent of PepsiCo’s sales. It is actively reducing fat in its snacks by 20 per cent through a proprietary frying technology. 

“Making healthier food and beverages for our consumers” is a key focus area for the US giant, she said.

Last year, the firm had taken up a project to reduce calorie counts in its beverages by focusing on low or zero sugar drinks. However, Nooyi on Wednesday said that taxing beverages for sugar content is wrong, as it implies targeting a particular product category.

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