Food and beverage company PepsiCo India on Tuesday announced its second manufacturing investment in India in seven months, coming at a time when rival Coca-Cola has been ramping up its production spends in the country.
Both global majors have called India a key growth market in recent earnings calls, saying they will increase investment in the country as packaged food and beverage consumption grows.
PepsiCo said it would invest Rs 1,266 crore to set up a new flavour manufacturing plant in Ujjain, Madhya Pradesh, for beverages, which is the second such plant in the country after an existing flavour concentrate factory in Punjab. In September last year, the company announced a `778-crore investment into Assam to set up a food manufacturing plant, the first in the North East. The company has a total of five existing plants in the country, four for foods and one for beverage concentrates.
The two new investment announcements by PepsiCo are to the tune of Rs2,044 crore between September and now, which comes close on the heels of nearly Rs 7,737 crore in investment that rival Coca-Cola is making in the country.
“We aim to ramp up the production of our beverages to meet the rising demand in the country. The investment strengthens our commitment to the region,” George Kovoor, senior vice-president, beverages, PepsiCo India, said.
While PepsiCo’s Assam unit will be operational by calendar year 2025, the one announced on Tuesday will be up and running by the first quarter of 2026, the company said.
Between December and March, Hindustan Coca-Cola Beverages (HCCB), the bottling unit of Coca-Cola India, said it would set up new bottling plants in Gujarat and Telangana for Rs3,000 crore each and in Madhya Pradesh for Rs350 crore. One more unit in Maharashtra commenced operations in Khed, Ratnagiri in February this year at an investment of Rs1,387 crore.
“Driven by our underlying cash flow generation and current balance sheet strength, we have ample flexibility to both reinvest in our business to drive growth and return capital to our shareholders,” John Murphy, president and chief financial officer of The Coca Cola Company, said during the company’s fourth-quarter and full-year 2023 earnings call in February.
“A significant portion of our expected capital investment increase is to build capacity for our India business as well as for Fairlife (American dairy brand), both of which experienced robust growth in 2023,” he said.
While PepsiCo India’s FY23 revenue grew 28.7% year-on-year to Rs 8,031 crore; profit was up over nine-fold to Rs255 crore in the period, according to Registrar of Companies (RoC) data. The company is yet to report its FY24 financial numbers. Coca Cola India, on the other hand, reported revenue and profit of Rs4,521 crore and Rs722 crore each in FY23, which is a growth of 44.9% and 57% versus the previous year, according to RoC.
HCCB, meanwhile, reported sales of Rs12,840 crore in FY23, a 40% jump versus the previous year. Net profit more than doubled to Rs809.43 crore in FY23 versus Rs375.43 crore reported in the previous year, RoC data shows.