PepsiCo to invest Rs 814 crore for setting up potato chips plant in UP

Production unit to commence operations by mid next year

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PepsiCo
PepsiCo India to set up new snacks manufacturing plant in Uttar Pradesh. Source - Reuters

PepsiCo is setting up a potato chips production unit in Uttar Pradesh with Rs 814 crore investment. According to the official reports, the new greenfield plant is being set up in Kosi, Mathura, on 35 acres of land provided by the UP State Industrial Development Authority (UPSIDA). The commercial production in this plant is expected to start by the middle of the next year and generate over 1500 direct and indirect employment.

PepsiCo is committed to double its snacks business in India and increasing the capacity of existing food plants in West Bengal and Maharashtra. In addition, the company has proposed to set up a greenfield manufacturing facility in Assam. PepsiCo India’s intended snacks manufacturing operation in Uttar Pradesh aims to expand its footprint of collaborative farming for potato in the state. The company’s planned investment is in line with the Uttar Pradesh State Government’s industrialization-led growth focus will create broader socio-economic opportunities for farmers, youth, and the skilled workforce in the state.

As part of this project, PepsiCo India plans to expand its backward integration with local farmers and bring agricultural best practices to enable socio-economic growth for potato farmers in Uttar Pradesh. The raw material (potato) will be procured through local sources. To enable the supply chain, the company aims to set up a cold storage facility that is expected to give an impetus to the development of ancillary and other support industries in the state.

PepsiCo
Potato chips processing plant. Photo – kalapalette

Ahmed El Sheikh, chairman, PepsiCo, told PTI that the initial investment for setting up this project was pegged at Rs 514 crore, which has now been revised to Rs 814 crore. “While there have been some short-term headwinds due to Covid-19, we at PepsiCo are extremely optimistic about the future and are committed to provide consumers the right portfolio of products across food and beverages.”

Alok Tandon, commissioner, Infrastructure and Industrial Developmental, said, “An MoU (memorandum of understanding) was signed by PepsiCo to set up this project with a proposed investment of Rs 514 crore at UP Investors Summit 2018.” According to him, due to the MoU tracking, land allocation, and labor-related reforms, a transparent investment system is being established in the state to suit the industries. As a result of this, PepsiCo has increased its investment from Rs 514 crore to Rs 814 crore.

PepsiCo India has emerged as one of the largest food and beverage companies in the country in 30 years of its establishment in India and is looking to build further, he added. As the festive season begins, the company expects an enhanced demand from categories like snacks, juices, and other carbonated beverages led by the sentiment of celebration. “From an FMCG point of view, the industry is seeing consumption revival, which we expect will only get better with further unlocking and the upcoming festive season,” ElSheikh said.

Commenting on consumer trends, ElSheikh said ‘in-home consumption’ is witnessing a significant uptake, and consumers are seeking convenience along with the value. “As people adjust to the ‘new normal’, in-home consumption is witnessing a significant uptake. There is a growing demand for our larger packs as in-home occasions of togetherness have increased manifold. While the consumers are looking at in-home experiences and seeking convenience, they are also looking at value,” he said.

PepsiCo has introduced a 1.25-liter PET pack in its beverage portfolio at a very affordable price of Rs 50, targeting the ‘in-home consumption’ and introduced various combo packs in the food portfolio. While, in the smaller packs, it has also strategized price points to meet both rural and urban demand.

“With the Indian FMCG industry slowly showing signs of revival in Covid impacted world, we have adapted quickly and re-strategised our price-pack programmes, enhanced consumer engagement initiatives and doubled down attention on both B2C and B2B distribution models to meet consumer demand,” he said.

According to a recent registrar of companies filing by PepsiCo India, its profit after tax in FY 2019-20 increased to Rs 329 crore from Rs 36 crore in FY 2018-19.

Though its revenue was down 15.87 % to Rs 5,264 crore compared to Rs 6,257 crore in FY 2018-19 on re-franchising the remaining bottling operations in southwest India to its bottling partner Varun Beverages. “PepsiCo India’s transformation journey remains on track — third successive year of profit in FY 2019-20 which has been all about building ‘a faster, stronger, better company’ in India,” he said.

Though its overall beverage volume grew during the FY 2019-20, its beverage revenue was lower on account of re-franchising and the impact of Covid-19 in the last fortnight of March 2020. Its food revenue grew due to strong growth in Lays, Kurkure portfolio, and Doritos.

“Focus on the core brands yielded results with growth across the portfolio namely Lay’s & Kurkure portfolio, Lay’s Maxx and Doritos. Similarly, Core brands drove beverage growth, led by Pepsi, Mountain Dew & Slice,” ElSheikh said.

PepsiCo had reported organic revenue growth in global Q3 results in some international markets, including India. On 1 October 2020, Ramon Laguarta, chairman and chief executive officer of PepsiCo, announced that PepsiCo’s international markets, developed market organic revenue growth increased to 8% and outpaced developing and emerging markets, which increased to 2%. In addition, the company witnessed double-digit organic revenue growth in France, Australia, and Brazil, along with high-single-digit growth in India and mid-single-digit growth in the UK, China, and Russia.

 

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