In a wide-ranging television interview on India’s CNBC-TV 18 yesterday, host Shereen Bhan asked PepsiCo CEO Nooyi about PepsiCo’s plans – revealed Monday – to spend $5.5bn over six years on its Indian operations.
In June 2012 The Coca-Cola Company announced it would invest $5bn in the country by 2020, with a view to India being among one of the firm’s top five markets, where it then occupied seventh place.
Reporting its Q3 2013 results on October 13, Nooyi said PepsiCo said snack volumes grew high single-digit in India but admitted it suffered a “meaningful slowdown” in its beverage business during the quarter due to “unusually aggressive industry pricing”.
‘The beverage industry has two great companies’
But reiterating PepsiCo’s long-term commitment to India, Nooyi brushed aside current fears over India’s economic volatility, with GDP growth predictions recently chalked down to around 5% -- after circa. 8% growth for the last 10 years – and insisted on the market’s fundamental strengths.
She also skirted over the issue of whether PepsiCo’s massive Indian investment was a response to Coke’s similarly significant 2012 spend.
“I think we all know that the beverage industry has two great companies. Two great companies that – collectively – are going to invest $10.5bn in India,” she told Bhan.
“I think everybody likes to make it a competition between the two companies, but I think we’ve got to look at this and say ‘between two companies – one a diversified food and beverage company, one a beverage company, we’re going to be investing $10.5bn into India over the next six to seven years’.”
‘Let’s look at the fundamental India story’
Nooyi noted that the two investments would provide jobs, strengthening the supply chain and manufacturing.
“So all of us collectively should sit back and say, ‘Isn’t it great that two US-based multinationals, truly global companies, are showing their confidence in India?” she said.
“That’s the sort of discussion we should be having – not C versus P, which is irrelevant.”
As to whether PepsiCo’s board ever questioned whether it was doing the right thing by investing so heavily, she replied: “Constantly. Any time we make an investment we always discuss a country and its prospects.
“But let’s go back and look at the fundamental India story – India has the best demographic story of any country in the world, India has numbers. The middle class coming up in India over the next five years is going to be more than the populations of the US, UK and France combined,” Nooyi said.
“The Indian spirit is an entrepreneurial spirit…the Indian spirit is one that powers its way through volatility,” she added. “India is a thriving democracy – it has a rule of law, so the fundamentals of India are very big.”