PepsiCo India's net profit plunges 62 per cent in FY22

Foods and beverages major PepsiCo India Holdings has registered a steep 62 per cent fall in its net profit for FY22. From Rs 73 crore in the previous fiscal, it dropped to Rs 28 crore. This is even as total operating revenue was up by 24 per cent from Rs 5,032 crore to Rs 6,240 crore, according to the company’s annual report filed with the Registrar of Companies (RoC) and a detailed financial analysis sourced from research platform, Tofler.  

Of its total revenue, Rs 754 crore or 12 per cent came from the water business (includes mineral and aerated waters), while the rest (88 per cent) was accounted for by the food preparation segment. PepsiCo India’s portfolio consists of brands such as Mountain Dew, Pepsi, Sting, Lay’s, Kurkure and Doritos. Its carbonated beverages are produced, bottled and distributed by Varun Beverages. 

In FY22, total expenses were up 24 per cent. Key contributors to this include the purchase of stock-in-in-trade (up from Rs 183 crore to Rs 319 crore or a hike of 74 per cent) and advertising promotional expenses (increased by 31 per cent from Rs 459 crore to Rs 601 crore). PepsiCo has been in India from 1989 and in the mid-1990s acquired Duke and Sons, which brought into the fold the Duke’s brands, known for their Lemonade and Mangola offerings. At the time of the deal, Duke’s was a big name in western India and PepsiCo, post the buyout, phased out the brands in 2004. 

Responding to a set of queries from Business Today, PepsiCo India’s spokesperson, in a statement, said, “Despite inflation, PepsiCo India witnessed strong double-digit growth both in revenue from operations and volume across our product portfolio for FY22. In addition, the company delivered fifth straight year of profit and witnessed an increase in EBIDA, despite the challenging operating environment and macroeconomic headwinds.” 

It went on to say that the company also continued to invest in both, customer facing activations and building capacity for future growth. “This is reflected in the increase in advertisement & marketing spends, depreciation and investment in capacity. Looking ahead, PepsiCo India is strongly poised to tap into the growing consumer demand as we continue to invest in the country, diversify our products to cater to the changing preferences of consumers, expand operations and further increase consumer touchpoints, especially post the pandemic.” 

The increase in expenses, added the statement, “were on account of commodity inflation, advertising and marketing spends, investment in capacity building and new offices as well as direct consumer engagement activities since the pandemic. Increase in volume growth had to be supported by increasing assets, plant operations, distribution channels and storage facilities.” 

In the carbonated soft drinks business, PepsiCo is directly up against Coca-Cola and its brands, which include Thums Up, Sprite and Coke. Speaking of packaged drinking water, Aquafina fights for market share with Bisleri and Kinley, while Tropicana, PepsiCo’s juice brand competes against Dabur’s Real, Minute, Coca-Cola’s Maaza, Parle Agro’s Frooti and ITC’s B Natural among others. In the snacks business, it faces competition from a host of national and regional players.