Home >Companies >Company Results >PepsiCo reports double-digit volume decline in India beverage business

Beverage and snacking major PepsiCo on Monday reported a double-digit drop in its beverage sales in markets of India and Pakistan in the quarter ended June 13, as the covid-19 pandemic shrunk demand and impacted sales channels, dragging the overall volume growth in the Africa, Middle East and SouthAsia (AMESA) region.

In the AMESA region the company said its “beverage volume declined 25% reflecting double-digit declines in India and Pakistan, a low-single-digit decline in Nigeria and a high-single-digit decline in the Middle East."

The COVID-19 pandemic contributed to a decrease in consumer demand, which had a negative impact on volume performance, the company said in its earnings statement Monday.

Net revenue in the AMESA region decreased 1%, the company said.

This reflects “a net volume decline and a 6-percentage-point impact of a prior-year refranchising of a portion of our beverage business in India, partially offset by a 13-percentage- point impact of the Pioneer Foods acquisition. Net revenue was also negatively impacted by the COVID-19 pandemic."

While snacks volumes grew significantly in the region—driven by its popular brands such as Quaker Oats and Lay's that benefitted from a shift to in-home consumption—in India, volumes declined in “double-digit" too as supplies remained disrupted in the first phase of the lockdown that started in late March here.

“Snacks volume grew 117%, primarily reflecting a 124-percentage-point impact of the Pioneer Foods acquisition, mid-single-digit growth in the Middle East and Pakistan and low-single-digit growth in South Africa, partially offset by a double-digit decline in India," the company statement said.

To be sure, the period factors part of the country’s protracted lockdown that commenced late March and saw restrictions on movement of people. Manufacturing and retail operations too were disrupted in the initial days of the lockdown.

For beverage makers, peak summer months were washed out as out-of-home consumption— that includes travel, cinemas, restaurants—remained under strict closures.

Overall, the company that sells popular beverage brands such as Pepsi, Tropicana, and Gatorade said that net sales for the quarter fell 3.1% largely pulled down by its beverage business. Snacking business benefitted from a shift to in-home consumption that saw more consumers eat packaged foods. Revenue for the quarter stood at $15.95 billion.

The company refrained from giving a financial outlook for 2020, given how dynamic the situation is.

“Despite being faced with significant challenges and complexities as a result of the COVID-19 pandemic, our businesses performed relatively well during the quarter, with a notable level of resiliency in our global snacks and foods business," PepsiCo Chairman and CEO, Ramon Laguarta said in the statement.

However, he added that with restrictions and closures eased and population mobility improved as the quarter progressed, the company saw an improvement in our business performance and channel mix dynamics.

“However, the environment has remained volatile and much uncertainty remains about the duration and long-term implications of the pandemic. As a result, we are not providing a financial outlook for fiscal year 2020 at this time."

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