New Delhi: Food and beverages major PepsiCo India reported a significant jump in profit to ₹255 crore in FY23 against a net profit of ₹27.8 crore a year earlier, according to its filings with the Registrar of Companies. The growth was driven by a cost efficiency drive, including strategic pricing adjustments to mitigate the impact of high inflation, it added.
The company, which sells Lay’s chips, as well as Mirinda and Tropicana brands of beverages, said its FY23 earnings grew by 28.5% to ₹8,128 crore on the back of higher sales of both food and beverages.
The strong summer of 2022 also helped lift demand for its beverages even as it increased its investments in brand building and expansion. Over the last two years, PepsiCo added 200,000 outlets pan-India.
“Last fiscal, PepsiCo India reported double-digit revenue growth in both foods and beverages. Despite the challenges coming from the two years of covid and commodity inflation, we’ve also been able to improve our profit and margins,” said Ahmed ElSheikh, president, PepsiCo India.
Despite being battered by high inflation which drove up manufacturing costs, PepsiCo stepped up productivity across categories. “Despite challenges on commodities and covid, we made sure that we remain invested in our brand activities. That is obviously helping us drive the top line. The other area we continue to invest in is capacity, particularly on foods. We also put out a lot of innovative products and it will continue to be a theme,” he said.
To be sure, PepsiCo operates a large foods and beverages business in the country. However, its beverages business vis-vis manufacturing and distribution is managed by its local bottling partner Varun Beverages that operates over 30 production facilities in India.
The company is also set to commence construction of its fifth foods plant in the north-east. “Our supply chain strategy needs to get closer to demand centers. On the food side of the business, we also have to be closer to our agriculture program (for sourcing potatoes). Basis that we have planned a footprint of manufacturing locations over the next several years. The last one was Kosi in Uttar Pradesh, the next one is going to be north-east,“ he said.
The company has four plants for its foods business in India followed by associations with several co-packers. It sells packaged snacks under Lay’s, Kurkure and oats and muesli under Quaker.
Market for packaged foods has expanded as covid prompted more households to switch to branded goods. New companies such as Reliance Industries have emerged too and competition from direct-to-consumer brands has shored up as well.
ElSheikh said greater competition will help drive capita drive per capita consumption of both snacks and beverages in the country. The company, however, did not comment on possible acquisitions in the future. “There is a lot of headroom right now within our core itself—both foods and beverages are very under-penetrated categories,” he said. The company will drive growth in both premium products such as muesli, gourmet chips as well as sports and energy drinks, he added.
On inflation, the company said the worst may be over. “Over the last two-to-three years we have been able to tighten our belt, take a lot of costs out of the system and drive multi-year productivity across the value chain,” he said. Inflation may bother the company for some more time but was on the “tail end”, he said.
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Updated: 08 Aug 2023, 12:19 AM IST