Leaders of major global consumer companies, including Coca-Cola, Unilever, Mondelez, PepsiCo, and Domino’s, have highlighted India as a key investment market, particularly for urban-centric and discretionary products.
Chiefs of these firms identified India as a “standout or sustained investment opportunity market,” especially for urban-centric, discretionary, or seasonal categories in their global April-June quarter earnings.
“The India business had a big swing in results. It recovered nicely from a slow start at the beginning of the year,” said Coca-Cola CEO James Quincey on an investor call. He cited high double-digit volume growth in the quarter and noted that lightweight bottles added over 400 million transactions in the first half of the year in India. The maker of Coke and Thums Up drinks reported 2%-unit case volume growth in the quarter, driven by India, Brazil, and the Philippines.
Rival PepsiCo’s chairman, Ramon Laguarta, stated that India “is a big growth space and an investment area for sure,” citing high single-digit organic revenue growth in the quarter. PepsiCo in India sells concentrate to its franchise partner, RJ Corp.-owned Varun Beverages (VBL). The quarter benefited from an unprecedented heatwave this summer.
On Thursday, FMCG giant Unilever reported 1.2% growth in India, with stronger volumes partially offset by price as lower input costs led to negative pricing. Volumes in India sequentially improved throughout the first half, reaching 3.8% in the second quarter.
“In Asia-Pacific, Africa, our biggest region, it is important to highlight the sequential improvement of our business in India. Our volume growth in India accelerated to 3.8% in quarter two as we consolidated the share gains achieved over the last three years,” said Fernando Fernandez, CFO at Unilever.
For most global consumer companies, the premium portfolio has outpaced their overall growth and now accounts for between 25% and 35% of their overall sales. A Kantar study released on Thursday revealed that while the overall fast-moving consumer goods market expanded 3.3%, premium categories have grown 35% by volume and 53% by value over the past two years. Companies aim to straddle price points as they increase distribution, especially in the hinterland.
Mondelez, the company behind Cadbury and Oreo, highlighted the potential in India, noting that chocolates have less than 200 grams per capita consumption annually in India, compared to nearly ten kilograms in several European markets. “India is one of the most successful markets we have. It’s a market that has grown tremendously and has a truly virtuous cycle, both in chocolate, which has a portfolio that spans across entry-level price points, and also in very premium chocolates,” said Luca Zaramella, CFO at Mondelez International.