Food and beverages major PepsiCo is "cautiously optimistic” about the future and feels that the worst due to the coronavirus pandemic is behind, buoyed by revival signs led by strong rural demand and in-home consumption in urban markets, according to its India President Ahmed ElSheikh. As the festive season peaks, the company expects enhanced demand in categories like snacks, juices and other carbonated beverages led by the sentiment of celebration.
"We are seeing strong demand from rural India for both our snacks and beverage products as a result of improved monsoons, labour migration and increased distribution of our portfolio," ElSheikh said. On the urban front, he said that while in-home consumption remains strong, this company is also beginning to see out-of-home or on-the-go consumption rising as the country continues to unlock more and more.
ElSheikh added that the coronavirus pandemic has been a black swan moment sparing no industry. The fast-moving consumer goods (FMCG) industry is also witnessing signs of revival and "we remain confident of the future". "We are cautiously optimistic about the future and feel the worse is behind us," he said. The firm is seeing strong demand from rural India for both its snacks and beverage products as a result of improved monsoons, labour migration and increased distribution of our portfolio, ElSheikh added.
Commenting on the impact of the pandemic on consumer behaviour and disposition, ElSheikh said, "The pandemic has led to a change in consumer behaviour and disposition, and they (consumers) seek brands they can trust and feel safe." During Lockdown, in-home consumption has witnessed a significant uptake as penetration and frequency of food and beverage categories has gone up. Moreover, PepsiCo, like other FMCG makers, has also gone for re-calibration of channels, to ensure the availability of its products. PepsiCo India partnered with platforms like Amazon, BigBasket, Grofers, Swiggy and Dunzo during the Lockdown.
"As a consumer-centric brand, one of our key priorities has been to provide consumers with a seamless and safe buying experience and further strengthen our relationship with the consumers," he said. While for business-to-business (B2B) institutional sales, PepsiCo further strengthened its existing distributor model with the e-B2B model (B2B e-commerce) where it partnered with Udaan and BigBasket to help small and medium businesses.
"This partnership ensured that our product portfolio was easily made available to retailers so that they can cater to demand in the market," he said. In addition to this, to ensure uninterrupted supply and last-mile availability in rural India, PepsiCo India also partnered with CSC e-Grameen to provide our products at the doorsteps.
"As per its business strategy, PepsiCo India will continue to focus on prioritising profitable channels, diligently managing SKUs (stock-keeping units) and ensuring revenue management, margin improvement and driving execution and productivity across the system," ElSheikh said. Under the new normal, PepsiCo harnessed the digital transformation with a focus on the modern trade and online segment, which helped the company address consumer demand through the initial lockdown and subsequent unlock phases.
"Our digital initiatives across our supply chain have helped us predict better, prioritise certain SKUs and retail channels and reduce costs in our production to the customer doorstep value chain," ElSheikh said. It has re-calibrated its strategy based on six guiding principles of being people-centric, being consumer-centric, being customer-centric, being agile, being prudent and also being community-driven, he said.
"Also, our efforts in scaling our distribution with a focus on modern trade and online in urban areas and greater reach in rural India have helped us address consumer demand during the lockdown," ElSheikh said. Investment in technology has allowed its employees to work seamlessly even from a remote location.
"We also ensured that we continue our farmer connect programme to help them with agri support in terms of best practices digitally," he said. According to a recent Registrar of Companies (RoC) filing by PepsiCo India, its profit after tax in 2019-20 increased to Rs 329 crore from Rs 36 crore in 2018-19.
However, its revenue was down 15.87 percent to Rs 5,264 crore, compared to Rs 6,257 crore in 2018-19. This was due to re-franchising the remaining bottling operations in southern and western India to its bottling partner Varun Beverages Ltd.
