New Delhi: In a telling pointer to India's growing importance in its scheme of things, global cola giant PepsiCo has decided to hold its board meeting in the country for the first time ever.
The decision comes just as beverage volumes in the country have registered an unprecedented 50% growth during the September quarter.
The company has been on track with doubling investments to $220 million.
A PepsiCo India spokesperson confirmed that the 13-member team will be in Mumbai between the 11th and 13th of this month for a three-day session.
But the India-born chairman of the board and CEO, Indra Nooyi, is scheduled to spend almost a week in India -- first in New Delhi as the co-chair of the World Economic
Forum and then in Mumbai to chair the board meet.
India is one of the few markets where the company has been able to generate high double-digit volume growth, despite a consistent rise in input costs.
Of the $220 million investment earmarked for 2009, $170 million would be brought in by the company and the remaining by its bottlers.
In fact, this is by far the largest investment made by PepsiCo in its beverage business since entering India in 1989. The growth reported by Pepsi in India appears to be spread across the company's product portfolio -- carbonated soft drinks, juices, juice-based drinks, sports drinks and water.
But has this phenomenal volume growth come at the cost of margins? An industry veteran pointed out that volume growth in these times of rising input costs can come only at the cost of profitability and despite Pepsi tasting success with new products such as 'Nimbooz', margins are likely to be under severe pressure.
He pointed towards Coca-Cola India's experiment with the Rs 5 price point some years back, which also resulted in large-scale volume growth but brought a lot of grief to Coke on the margins front.
So, perhaps wiser from the 'volume-at-the-cost of margins' strategy, both companies have indicated that they are considering price hikes.


