Growth has to be sustainable and profitable: PepsiCo's Ahmed El Sheikh

Ahmed El Sheikh, president and chief executive officer, PepsiCo India region
PepsiCo India has managed to turn profitable after four years. But the food and beverage company is silently transforming its portfolio, business strategy and approach. Six months into his new stint, Ahmed El Sheikh, president and chief executive officer, PepsiCo India region, shares his plans with Arnab Dutta. 
Edited excerpts:

What is the mandate that you come with?

I believe there are lots of opportunities but we should not run after everything. We have to select certain areas and be clear about where we can be the number one or gain share. It is a stated fact that India is a growth opportunity. If this is the state of the economy, then business also has to perform accordingly. But our industry has been the worst performer among FMCG categories, with the growth rate hovering around 0.8 times of the GDP rate, while FMCG grew about 1.5 times. We have to deliver the numbers. To grow about 1.5 times the GDP, we have to grow in double-digits. And the growth has to be sustainable and profitable.

What is your assessment of the business here?

Penetration is not a concern among consumers who can afford. But, to improve sales among lower strata of the socio-economic pyramid, increasing penetration through affordable offerings and better availability is crucial. Now, we have products at Rs 10 price point and below, placing hydration drinks at the forefront. To increase availability, we are leveraging the wide breadth of our portfolio and the scale of our partners. For example, while earlier we used to distribute Tropicana products through a premium go-to-market channel, now we have roped in Varun Beverages to widen its reach. Also, we are now appointing the same distributors for both food and beverages, so that logistics capacity can be better utilised without any extra cost. A successful rural electrification drive has unlocked new opportunities.

PepsiCo India failed to post profit since 2012-13. How do you plan to turn it profitable?

We have managed to post profit in 2017-18. This is a result of the pain that we had gone through during the past three years. There was a price that had to be paid. Today, we are in a very good position to leverage our strength. We have over Rs 130 billion of investments lined up in the short-term. Some of which is being used to add capacity in two of our company-owned bottling plants and two other plants owned by our bottlers. We are also strengthening backward linkages, in agro projects, which will further supplement our expanded capacity in coming years.

Your competitors like ITC have openly declared a war in the juices category. What is the counter-strategy?

We respect our competitors and we don’t have any arrogance that we are a global player and someone else is a local player. Tropicana is the largest juice brand in the world and we have a legacy. We would rather compete on the ground.

Regional players are posing tough competition. How do you plan to defend that?

I agree. It is important to grab opportunities that are available in the market. We wish to be ‘glocal’ - a perfect blend of global and local cultures. We don’t target any specific competitor but we will definitely get in segments that offer attractive business. Also, India is a very big market and taste preferences differ between regions. So our approach is to be relevant to consumers. We have launched fizzy drinks under slice in PETs, priced at Rs 12.

What has changed in PepsiCo India?

We have managed to connect all our business operations and stakeholders through digitisation. Now, our customers are connected with the farm, through the system. And this will help us in the future.

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