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Leading beverage makers Coca-Cola and PepsiCo have indicated that the impact of demonetisation on their India businesses seems to be gradually fading.
The two released their first quarter results this week.
Coca-Cola, has reported a low single-digit decline in its sales volumes in India and South West Asia business unit in the January-March period.
However, in an earnings call, the company’s incoming CEO James Quincey said, “India, while it began the year slowly, performance improved, with any remaining impact from the demonetisation largely worked through by the end of the quarter.”
Job cuts
India is the sixth largest market globally for the company and it aims to make it its fifth largest market before 2020.
As part of its accelerated cost saving efforts, the company also announced plans to cut down about 1,200 jobs this week.
However, the job-cut plan is expected to largely impact the company’s Atlanta headquarters.
When contacted, a Coca-Cola India spokesperson said, “The announcement on a leaner enterprise structure refers to the company headquarters and not likely to have any impact on India.”
Nooyi speak
Meanwhile, beverages and snacks maker PepsiCo too, said that India is moving towards remonetisation.
In an investor call, PepsiCo Chairman and Chief Executive Officer Indra Nooyi said, “India is coming out of a bold demonetisation now to remonetisation.
“There's good GDP growth and we feel good about our business prospects there, too.”
The company, however, did not give specifics financials information regarding its India business.
Crucial period
India has been a tough market for soft drink companies in recent times. Besides, the impact of demonetisation and slowdown in rural demand, the two companies also witnessed sales disruptions in Tamil Nadu, due to the trade associations’ call to boycott international cola brands in the first quarter.
With the onset of summer and soaring temperatures, the April-June period is going to be crucial for the beverages industry to revive growth.
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