Published : Nov. 12, 2013 - 19:31
Women walk past a Pepsi advertisement in New Delhi. (Bloomberg)
NEW DELHI (AFP) ― U.S. soft drinks giant PepsiCo announced Monday it would invest over $5 billion with its partners in India to raise production, saying it had only “scratched the surface” of the Asian giant’s potential.
In further welcome news for India’s Congress government as it struggles to woo foreign investment with economic growth at a decade low, British retail giant Marks & Spencer said it aimed to more than double its stores in India to 80 by 2016.
PepsiCo, the world’s second-largest beverage firm, said the 330-billion rupee investment ($5.5 billion) by 2020 was aimed at boosting its strengths in manufacturing, infrastructure, agriculture and other areas in India, one of its biggest markets globally.
“India is a country with huge potential and it remains an attractive, high-priority market,” said PepsiCo chairman Indra Nooyi.
The investment plans are a shot in the arm for the government, which has seen foreign direct investment slow sharply with an economy growing at five percent, a string of corruption scandals and high inflation.
“We’ve built a highly successful business in India over the course of many years, and we believe we’ve only scratched the surface of the long-term growth opportunities,” Nooyi said.
“This investment is PepsiCo’s vote of confidence in India’s future,” she added in a statement.
She was firing the latest shot in what the local media has dubbed the “cola wars” with rival Coca-Cola Co., the world’s largest soft-drink maker, which last year announced plans to spend $5 billion in India to increase its operations.
PepsiCo and its bottling partners will more than double production capacity in India by 2020. They now have 38 bottling plants and three food plants in the country.
The coal giants are battling for a beverage market in India expected to grow by over two-fold to more than $18 billion by 2017, according to industry figures.
India’s consumption of soft drinks is low relative to its Asian neighbors, making the market more alluring.
Pepsi entered the country as it was opening the market to foreign companies over two decades ago. Indian market leader, Coca-Cola, forced out of the country by a nationalist government in 1977, returned in the 1990s, buying out top local cola, Thums Up.
Emerging markets can offer sales growth rates up to five times those of developed markets, according to experts.
Meanwhile M&S, which has teamed up with Reliance Retail, part of billionaire Mukesh Ambani-led conglomerate Reliance Industries, said it would making India the British firm’s largest international market by 2016.
“India is a priority market for Marks & Spencer,” said M&S chief executive Marc Bolland. “Now with 36 stores, we have the ideal platform to accelerate our growth.”
M&S, which reported a 28 percent sales jump in India for the first half of the financial year, said it is “focusing on driving growth in key priority territories of India and China.”
The commitment by M&S comes as the world’s biggest retailer, WalMart, recently exited its joint Indian venture, saying it would wait for greater clarity on Indian retail rules before opting to expand beyond the 20 wholesale stores it already runs.
A street vendor is seen behind PepsiCo Inc. products displayed for sale on a cart in New Delhi.
(Bloomberg)