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PepsiCo India makes profit in India after 7 years on cost-efficiency measures

BusinessToday.In     October 2, 2018

Beverage and snacks giant PepsiCo India made profit in 2017-18 after a gap of seven years, its latest filing with Registrar of Companies showed. This profit was driven by cost-efficiency measures, high-margin products and higher capacity utilisation, as mentioned in a report in The Economic Times. PepsiCo, which posted a loss of Rs 148 crore a year previously, reported a net profit of Rs 190 crore in 2017-18. The last profit PepsiCo reported was in 2010-11, as shown in the filings. The beverage company said that it exited the fourth quarter of 2017-18 with double-digit growth momentum.

"Focus on profitable channels, packs and innovation, cost management and productivity to offset inflation, local agriculture programmes and procurement for citrus and corn, and maximising capacity utilisation were factors that brought balanced growth," Rajdeep Datta Gupta, Chief Financial Officer of PepsiCo India told the daily.

PepsiCo said it launched 80 products and variants, including flavours, pack sizes and packaging between 2015 and 2018. Out of its products, Lay's, Kurkure, Quaker and Doritos were its leading growth drivers. High-margin products such as Pepsi Black and energy drink, Sting, also showed 'encouraging results'.

New York-based Purchase's India unit said in 2016 that it was going to transform its portfolio for sustainable and profitable growth in a three-year reset. The company said that it has rationalised its portfolio for operational productivity as well as reinvested in marketing expenses.

Varun Beverages that distributes Tropicana juices, Gatorade and Quaker Oats acquired PepsiCo's bottling operations in North and East India in 2014. That move was undertaken to see through optimisation of costs, acceleration of operational and supply chain efficiencies and downsizing asset-heavy operations.

The global sales reported by PepsiCo for April-June 2018 surpassed the expectations of trade analysts. This growth was fuelled by salty snacks that have consistently offset the slow sales of fizzy drinks. PepsiCo and rival Coca-Cola have been witnessing a slug in the sales of their core drinks portfolio as customers are edging towards healthier options such as tea, juices and flavoured water.

(Edited by Anwesha Madhukalya)

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