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The decision to hold the board meeting in Mumbai did serve a symbolic message that India is an important market. But how do you translate this message into action in terms of a ramped up India business plan?
The board meeting was a reinforcement that India is a high priority market. It enabled the board to see first hand the opportunities it offers, the size of the opportunity and the challenges that it offers. We at PepsiCo India are positioned to capture the best of those opportunities to take our business forward.
It really was first hand reinforcement for them. We are having a fabulous year.
What major decisions in terms of investment and product portfolio have been taken in the board meeting?
The board meeting looks at long-term issues. There was no specific decision that we were seeking from the board. You are aware of the significant investments that we are making. The board is very happy making those investments. The significance is that if next time they sit as a board in New York and look at a proposal from India, they will understand it much better.
They understand the people behind that proposal, they understand what type of products and categories we have, they understand what kind of shops we will be selling the products in, so that it gives them much better and deeper understanding based on which they can make their decisions.
Your plan to raise about $200 million is stuck with the Union finance ministry? What is holding it up?
It is just a procedure. I can't talk about the details on that. It should be cleared in a short while.
What are your new targets in the third most important market?
India is among the top three priority markets. If you look back at the last 18 to 19 years, we have got business of over $1 billion in both food and business combined. We are pretty happy with what we have got. We are the fourth largest fast moving consumer goods company in a short period of time. All other mega-brands have been here for 50 to 70 years. Our food business has been the fastest growing business in the last whole decade. Our beverage business is the fastest growing beverage business over the last two years. We generated some 150,000 jobs in 19 years.
We have made a significant investment of $1 billion in the country so far.
We are also in the process of achieving positive water balance. We work with 22,000 farmers and help them produce more and earn more. Looking ahead, there is a massive expansion opportunity.
We plan to create 50,000 jobs in the next three years. In the next three years, even contract farming would touch the lives of 50,000 farmers.
Your global CEO talked about raising the CSR quotient of the company. Do you see that as a strategic tool to address the strife in parts of the civil society in India with regard to your product line?
There have been a few mistaken and wrong accusations. Firstly, that there were different standards across the world, but not in India specifically. Now, the standards of food and beverage safety are very stringent in India. It is more stringent than baby food standard in Europe.
All PepsiCo products are well within those standards. I would like to quote our chairman. She says that for any large organisation like PepsiCo to succeed in a sustained fashion, it is very important for communities in which we live and operate, to succeed as well.
We have four defined areas. We are committed to being India's model development partner. Within that, we have our areas of choice such as water, agriculture, wastes and healthy children. But it should be beneficial for us as well. We do not want to trivialise things. We want to build our expertise and do it on a very wide landscape. This year, we have recharged six billion litres of water.
India has a food regulator in place who is busy launching the new licensing norms and standards to be enforced for the sector early next year. What are your concerns, if any, in this regard?
It is always our intention to partner with the food authority in terms of bringing in regulation. We welcome regulation and we encourage regulation. It really raises the standards so that we are offering the consumers food and beverages which are absolutely safe.
Secondly, regulation should be sharp and focused so that there is very little room for ambiguity. Thirdly, if there is a regulation, then there has to be the ability to enforce.
In terms of decisionmaking, when do you decide if you want to launch a localised product or bring in an international product? How do you decide? What percentage of your overall product portfolio is actually Indianised?
We launched Nimbooz and Aliva this year. Both are Indian products. They are not anywhere in the world. That will remain our intention. We will always have a mix of global brands from our global portfolio as well as brands and products which are sharply created for Indian consumers using Indian ingredients, leveraging Indian taste and culture. We have Slice and Nimbooz on the beverage side. On the snack side, it is relatively large, almost 50 per cent of Fritolay products are locally developed.
In terms of product portfolio, health appears to be a focus, but even there the food regulator is keen to keep an eye on what is going to be permissible. Do you see any constraint there?
There are some areas where the regulator needs to adopt global norms quicker. That is certainly desirable. Obviously, that allows us to use products and ingredients which is used in other parts of the world.
You are investing $200 million this year. Last year, $500 million was announced for investment over three years. What are your plans?
We are investing close to $200 million this year. The areas remain same. One is capacity, both in terms of existing plants and some new plants. Second is market place infrastructure, such as racks, coolers and trucks. Third is research and development (R&D).
We have doubled our investment in R&D over the last couple of years. And the fourth area is agriculture. We are ramping up our whole supply side mechanism as well. We are into newer crops also, as we keep on building our portfolio.
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