Interesting India

Updated: Mar 31 2005, 05:30am hrs
PepsiCos announcement of in-vesting an additional $500 million into its Indian operations should not come as a surprise. PepsiCo, after all, is in the same warp as most other FMCG and durables majors in the world the western markets are saturated and growth is slow to come by. As a result, they are looking at developing nations, such as India, for future growth. In the US, for instance, soft drinks sales grew just 0.7% last year. In that sense, PepsiCo is still better off. It is growing at a healthy 8-9% every year. But The Coca-Cola Company, that owns four of the worlds five largest soft drinks brands, grew just 4.4% last year. Unilever is growing at 5-6%, as is Colgate-Palmolive. Of course, their base is much larger, but growth is still not as easy to come by as it is in the developing countries. In India, Pepsis business has grown four-fold in the past five years and it now hopes to put on the boosters, to triple its revenues over the next three years.

But even as the MNCs plan big on India, they must realise that transplanting global models here has often met with failure. Only those organisations that have adapted local business models and tweaked their product portfolio to suit the Indian requirement have been successful. The MNC focus on India has also thrown a great opportunity at their Indian arms, which the latter must leverage to make an impression on the global scene. Organisations such as McDonalds India, Dominos and Pepsi are examples of how local arms can develop products to suit the domestic requirements and, perhaps, even global requirements at a later stage. McDonalds India has indigenously developed products like the McWrap, likely to be adopted by McDonalds in global markets. Pepsis own snack food product, kurkure, is now likely to be exported to countries such as the UK and the US.

At a level, the interest in the Indian market is also a function of the consuming population. Even at a very low per capita consumption by world standards, potentially India will always be a huge market for FMCGs and durables, because of its billion-plus population. The country must make the most of this opportunity by building on a global scale and creating world-class corporations, as the US did by capitalising on its own consumer boom.