India now an anchor market, says PepsiCo

New Delhi: Beverage and snack maker PepsiCo Inc is betting big on India, identifying the country as one of its 13 "anchor markets", alongside others such as China and the Middle East. The company expects these markets to contribute more than 85% of its future growth even as it battles headwinds in larger markets such as the US.

"We will prioritise these 13 anchor markets for investments, services and capabilities to perform to their potential," Ramon Laguarta, global chief executive and chairman of the maker of Pepsi cola and Lay's chips, wrote in an internal note on restructuring on December 10.

Challenges in its top markets has led PepsiCo to trim its 2024 sales forecast and initiate a new global restructuring plan, effective January 1, said executives with direct knowledge of the developments.

Laguarta further said in the note that PepsiCo is forming an International Beverages Region, effective January 1, to align all global franchisees with P&L accountability.

This will include PepsiCo's India-listed bottling franchise partner Varun Beverages Ltd, the executives said. The International Beverages Region will oversee all franchisees of PepsiCo's beverage businesses.

The restructurings come amid an intensifying battle in the beverage and snack business in India, which PepsiCo has identified as a core growth bastion. Soft drinks currently have low penetration in the Indian market.

Apart from traditional rivals in beverages such as Coca-Cola and Paper Boat, and relatively new entrants such as Reliance Consumer Products and Storia, PepsiCo faces aggressive competition from scores of regional and direct-to-consumer snacking brands.

Research firm IMARC estimated the India snack market at ₹42,694 crore by sales last year, projecting it to grow more than twofold to ₹95,521 crore by 2032. For beverages, ICRIER has projected that India's non-alcoholic beverage market will touch ₹1.47 lakh crore in sales in 2030, more than doubling from ₹67,100 crore in 2019, with aerated drinks and bottled water contributing bulk of the growth.

While PepsiCo missed earnings estimates in the September quarter for its US and China business, its Indian operations reported double-digit organic revenue growth. For the same quarter, PepsiCo reported that its convenient foods unit volume declined by 3% in the 12 weeks ended September 7, 2024 in the AMESA (Africa, Middle East, South Asia) region, attributing it to a double-digit decline in the Middle East and Pakistan, partially offset by high-single-digit growth in India.

"Accelerating our international beverages business is a top growth opportunity for PepsiCo...We will strengthen the management and leadership structure of the international beverages business by increasing consumer focus and innovation and more distinctly managing the franchise beverage business from our company-owned food and beverage businesses," said Laguarta in the note.

PepsiCo India did not respond to ET's queries.