Pepsi, Coke, Cadbury target rural market in India
After soft drinks giant PepsiCo announced it would invest nearly Rs 34,358 crore in India by 2020, it became the latest multinational to bet big on the country after key rival Coca-Cola, chocolate-maker Cadbury and consumer goods giant Unilever.business Updated: Nov 14, 2013 02:31 IST
US soft drinks giant PepsiCo this week announced it would invest $5.5 billion (nearly Rs 34,358.5 crore) by 2020 to expand its operations in India, becoming the latest multinational giant to bet big on India.
Its key rival Coca-Cola, chocolate maker Cadbury and consumer goods giant Unilever had announced big investment plans in India over the past couple of years, even as the Indian economy has slowed.
Coca-Cola last year said it would also invest $5 billion (nearly Rs 31,235 crore) in the country.
Cadbury India, part of the US-based biscuits and chocolates maker Mondelez is investing Rs 1,000 crore to set up a manufacturing plant in Andhra Pradesh.
Coca-Cola officials say the money is being spent to increase bottling capacity in India, expand distribution and also for brand-building.
Last month, it opened its 58th bottling plant in Chatta, Uttar Pradesh.
“We believe we have only scratched the surface of the long-term growth opportunities,” said Indra Nooyi, Pepsi’s chairman and CEO, said.
Indeed, consumption of fizzy beverages in India, for instance, is far low at less than 20 servings a year, compared with the international average of 94 servings.
Analysts say the packaged foods market in India is growing over 15% each year and will top $30 billion (nearly Rs 1.87 lakh crore) by 2015.
“Consumer companies see it as a strong market to be in the long term, given that consumption levels are low, penetration levels are lower…Despite the slowdown, most consumer companies have grown reasonably 15-20%, and that is driving fresh investments by companies,” said Pinaki Mishra, head of consumer goods and retail practice at Ernst & Young.
India’s rural market accounts for of around 840 million people, and analysts say rising income levels and aspirations is increasingly driving demand there. Over 2009-10 and 2011-12, rural consumption per person grew annually at 19%, according to National Sample Survey Organisation data (NSSO).