“There is certainly a sensitivity lens; cultural sensitivity through which we are evaluating all creatives. But we have not got into any such issues,” PepsiCo India president Ahmed Sheikh told ET in an exclusive interview.
“Do we have a process? The answer is yes. Are we trying to think two-three times before we issue a new creative from different aspects in order to ensure we don’t make mistakes? The answer is again yes,” Sheikh said.
Beverages have had two back-to-back peak seasons coinciding with the peak Covid-19 wave. The April-June quarter contributes to more than half of annual packaged beverages sales.
Sheikh said while the timing of the pandemic overlapped peak season for soft drinks, consumption is very encouraging now. “I am very optimistic that in the next peak summer, we will overcome what happened in the last two summers. The timing of the Covid-19 wave did overlap the season. But now the performance is very encouraging; traffic is back in both foods and beverages, consumption is back.” He attributed the growth to being driven largely by rural India, packages consumed at home and out-of-home both are driving growth now.
The maker of Pepsi and 7 Up soft drinks, Tropicana juice and Lays and Kurkure snacks is keeping a close watch on the likelihood of a third wave, though Sheikh said is unlikely to impact business much. “The question right now is after the festive season, what will be the magnitude of wave three. We expect the impact to be moderate to lower, with vaccination progressing at a very high rate.”
He said beverages are growing faster than foods, overlapping a base of the Covid-19 impact in season. Rural markets are also growing faster for PepsiCo. “Rural is 100% growing faster for both beverages and snacks. It went down a bit amid the peak pandemic but has now recovered.”
He attributed the growth to government investments in rural markets, MNGREA schemes, road infrastructure, which has played a significant role in distribution penetration, expanding electricity to villages, and direct schemes putting more money in wallets of rural consumers.
Sheikh flagged commodity inflation as the “biggest impact” on business going forward. “We are looking at strategies on how to protect price points at entry levels-this is our biggest challenge now,” Sheikh said.