In the middle of global demand headwinds and layoffs, many multinationals, including Nestle, PepsiCo, Mars-Wrigley, Coca-Cola, and Mondelez, are doubling down on India with higher investment, augmented spending, and selective hiring in their annual operating plans for 2023, having identified it as among the few markets that are growing.
PepsiCo India President Ahmed El Sheikh said, “Economic growth opportunities are huge; we are adding newer categories and investments and increasing spending incrementally.” “As we make our annual plans for next year, we have identified that this is the decade of India.” At last week’s Nestle SA investor meet, the Swiss maker of Nescafe coffee and Maggi instant noodles highlighted that the country was becoming an even more important geography and stated its intent to “invest and develop in India” to drive penetration and launch new proprietary items.
The emphasis on India comes at a time when companies such as PepsiCo, Coca-Cola, General Mills, Walmart, and Amazon have announced downsizing of the workforce and operations in markets like the US and Europe to cut costs amid inflationary pressures.
Global prices of sugar, coffee, edible oil, plastic, and paper have been at a decade-high in recent months amid an uncertain economic environment and the impact of Russia’s invasion of Ukraine, which led to supply chain disruptions.
However, India, Asia’s third-largest economy, with its billion-plus population, has massive headroom to grow, with very low penetration in many categories, a large and growing middle class, and higher spending on premium products.
The largest number of consumers will come from India between now and 2030 across the Asia Pacific, Middle East, and North Africa regions. In the past decade, India has been a growth area for most global firms, especially as home markets saw slower expansion. But what’s changed now is that India is seen as an exception, even among emerging markets.
“Unlike earlier, when several emerging markets were also growing, India is now almost an exception in terms of growth and potential,” said Kalpesh R. Parmar, country general manager, Mars Wrigley India. The headroom for growth, both in terms of penetration and per capita consumption, is perceived to be substantial. For instance, per-capita consumption of chocolate is around 140 grams per year in India, while in the UK, it is over 10 kg per year. However, companies stated that it is not just India’s consumption opportunity.
“We have a local R&D hub that not only works for us but also for the global chocolate industry.” “We have a local IT hub and one of the largest shared services globally for the backend, which we call shared services, so a lot to be proud of,” said Deepak Iyer, president at Cadbury Dairy Milk and 5-Star chocolate maker Mondelez India.
The World Bank bumped up India’s FY23 growth forecast to 6.9% from the 6.5% projected earlier in October. Mountain Dew and Lay’s snacks maker PepsiCo, which will dismiss hundreds of employees in markets like the US, said the layoffs would “simplify” the organisation, the Wall Street Journal reported on Monday, citing an internal memo. Others like Coca-Cola, Amazon, Walmart, and General Mills are among the consumer companies that are trimming their workforce globally to curb costs amid bleak growth forecasts.