PepsiCo’s beverage volumes go flat in Q2, snacks sales up marginally in India

Beverage and foods maker PepsiCo has reported flat volume growth in beverages for the quarter ended June 14, 2014 (the firm follows a 12-week quarters which does not correspond directly with a traditional three month reporting system) and low single digit growth for snacks during the same period in India. This shows the firm continues to be under a low growth spell which has been affecting cola firms for over a year now.

In contrast, arch rival Coca Cola saw a resurgence, with double digit growth in volume for beverages in India last quarter.

What’s worrying is that India underperformed even within PepsiCo’s Asia, Middle East & Africa region (AMEA).

AMEA beverage volume grew 2 per cent for PepsiCo Inc, driven by double-digit growth in the Philippines and low-single-digit growth in the Middle East, partially offset by a high-single-digit decline in China. Additionally, volume for India and Pakistan was flat as compared to same period last year when both the markets had clocked double-digit growth.

The growth in snacks segment was a shade better, but just. Regions like Australia and the Middle East both experienced mid-single-digit growth and Thailand and India each experienced low-single-digit growth. Snacks volume grew 7 per cent for AMEA, reflecting double-digit growth in China and high-single-digit growth in Pakistan.

The company, which has snacks such as Lays, Kurkure, Cheetos, Uncle Chips in India, had sported a high-single-digit growth rate in India in Q2 last year.

The company noted, “In the previous quarter, net revenue grew 1 per cent, reflecting volume growth and favorable effective net pricing, partially offset by the impact of the prior year refranchising of our Vietnam beverage business, which negatively impacted net revenue growth by 2 percentage points.”

Operating proffer the region declined 27 per cent, primarily as a result of lapping the structural changes associated with the prior year refranchising of its Vietnam beverage business, which negatively impacted operating performance by 27 percentage points and primarily reflected a one-time gain of $137 million.

Late last year PepsiCo had roped in D Shivakumar, former managing director of telecom firm Nokia, as its chairman and CEO, India region.

Globally, PepsiCo saw net revenues grow a negligible 0.5 per cent to $16.89 billion while net profit declined 1.6 per cent to $1.97 billion.

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