Pepsi is not losing money in India: Ahmed El Sheikh
In his first interview since taking over as Pepsi India president, Ahmed El Sheikh said the beverage maker can easily double business in 7 years or earlier
New Delhi: Last month, PepsiCo Inc. chief Indra Nooyi said that the American food and beverage maker had grown at a double digit rate in January and February. The news comes within six months of Ahmed El Sheikh coming to head PepsiCo’s India business replacing D. Shivakumar. In his first interview since taking over as the president (India region), PepsiCo India Holdings Pvt Ltd, in November 2017, Sheikh said the Indian unit can easily double the business in seven years or earlier. Sheikh was earlier senior vice-president and general manager for PepsiCo Egypt and Jordan. Edited excerpts:
Changing consumer preferences and rising competition have hit PepsiCo India sales in the recent years. How soon would you be able to correct this?
Last quarter, we grew at a double digit rate. In the December quarter, we had high single digit growth. So the momentum for growth is building up. India is like a continent. Every region is different and has its own flavour. One strategy does not fit all. The key is to ensure growth that is profitable, sustainable and executed in a responsible manner.
PepsiCo has been reporting losses since fiscal year ended 31 March 2014.
As a business entity, we are not losing money in India. We are making money here. My predecessor D. Shivakumar has done a great job of transforming the portfolio that makes growth inevitable. India is the fastest growing among the large economies. If you look at the FMCG industry, it has always grown faster than the economy. Food and beverages grow faster. With efficient execution of our strategy, backed by PepsiCo’s beautiful proposition that has something for every segment of the market, we can grow 1.5 times faster than the Indian economy.
Is there a set target?
We want to double our business. The Indian economy is projected to double in seven years. We should be able to double our business earlier.
We need to be laser focused and very selective and ensure profitability in every segment we play in, starting from the Rs2 Tata Gluco Water to the premium products that we sell.
Is there a key target segment for you?
Income class is a way to look at it. We are talking about 65 million consumers with $11,500 of income. This is as big as the country of Thailand. You can have a separate business model for this itself. So, e-commerce and modern trade channels are very attractive. We can’t ignore them. But, to win, we need a different strategy for these channels. What we need to do is to focus on availability and affordability. But we also need to balance penetration and frequency. At the same time, we can’t ignore the segments below that. Our goal is to reach every Indian, every day on every bite.
That’s an ambitious target. PepsiCo only reaches less than a fourth of India’s estimated 10 million retail outlets.
Recently, there was a news which stated that the last Indian village has got electricity. This means, I can now have chilled PepsiCo beverages in every Indian village. With that, seasonality will play a less important role. That’s an outstanding opportunity for us. If I can’t ride on this opportunity, then I have failed.
We need to expand reach, and we are working on this. We have started leveraging the distribution strengths of our bottling partners for some products and in some parts of the country. There will be more in future. Whenever there is an opportunity for distribution, we’ll leverage.