CALCUTTA, India, March 31 (UPI) -- Despite that the $700 million of investments that PepsiCo has pumped in India since it started operations in 1989 is yet to yield real profits, the India-born president and CFO of the world's number two beverage company thinks that India packs enough fizz to make it invest even more.
On her second visit to India since she assumed the president and CFO's job in the PepsiCo three years back, Indra Nooyi announced her India strategy on Tuesday that will involve an investments of $300 million to $500 million over the next 3 years to 5 years.
The strategy also includes introduction of newer products in the country and even taking "Kukure", its best selling Indian snack food brand global. "We are studying the possibility of taking Kurkure to markets like the United States, United Kingdom, Australia, South Africa and West Asia, which have large populations of Indians," Nooyi said.
If Nooyi's plan works out, Pepsi would only be the second instance of a multinational fast-moving consumer goods company going global with an Indian brand. A few years back Unilever, the British multinational had taken one of its cosmetic brands- called Fair & Lovely initially meant only for the local market-, global and that is now available in over 30 countries.
About 60 percent of Pepsi's fresh investment would be spent on beverage business to expand the beverage portfolio and provide a range of choices, while the rest would be spent on snacks and expanding its farm exports. Snack foods account for about 25 percent of PepsiCo's sales in India and "requires a lot more infrastructure to roll out," she added.
Nooyi revealed that in an effort to integrate global and local brands in India, PepsiCo is also seriously examining strategies to launch Quaker Oats in India in a format that gels with the local habit of eating a hot breakfast.
Pepsi says that although after about 16 years of presence its Indian operations hasn't started making book profits -- and still carries accumulated losses -- because the country hasn't matured enough as a beverage consumer but, "We are making cash profits from our Indian business," said Nooyi adding that she is "bullish on India and looking at the market as a long-term bet."
According to Nooyi, India has been one of the star performers for the company, and now ranks among the top five markets in the world in terms of revenue with growth rate higher than some of the more mature markets in the Pepsi-fold like United Kingdom, Mexico and Western Europe.
"India is a rising star and its performance has been spectacular," Nooyi said.
Pepsi claims that in the last four months, Pepsi's India operations have bagged the top slot as the Number one seller in the fizzed soft drinks category with a market share of 46.7 percent. It nearest rival and global number one Coca Cola, trailed at 45.5 percent.
Pepsi also claimed that it is now the second largest consumer brand in the country. Moreover, "Five years ago, we had 50000 outlets; today, we have over half a million," Nooyi said, adding, "We are planning to triple the business in the next 3 years to 4 years."
Nevertheless, Pepsi-India has not been without trouble. During it initial years the company got mired in various controversies regarding its farm products sourcing strategies and last year, all soft drinks in India including Pepsi's came under severe scrutiny of the local food authorities on allegations of containing pesticide.
Nooyi though insists with a "a sad shake of the head" that Pepsi meets the strictest global standards. "We've done any number of tests. I have a degree in chemistry, I've seen the test results and I honestly don't have a clue why we are in the middle of this controversy," she said.
According to her Pepsi's Indian operation has had a notable economic impact on the country. The company has provided employment, directly and indirectly, to 60000 Indians and its investments in farm products- particularly in basmati rice, tomato, potato crops, and a citrus fruits cultivation drive in the Indian state of Punjab- has earned the country $60 million of farm exports in the last 10 years.
Pepsi Indian product line in divided into three distinct categories: the "fun-for-you" products that includes soft drinks and snack foods; the "better-for-you" products that includes Diet Pepsi; and the 'good-for-you' products consisting of nutrition-added products like Tropicana fruit juices.
One of the key indicators that India is high on the priority list of PepsiCo worldwide, said Nooyi, is the fact that about significant percentage of Pepsi's Asia Pacific managers alone are Indians. "India is a testing lab for our global managers," she says adding that important country operations of China, Singapore and Malaysia have Indians who have worked in the country or outside now managing in top positions there. Moreover, about 25 managers in the highest ranks in Pepsi system worldwide are Indians