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Feb, 15 2018

PepsiCo open to refranchising : Indra Nooyi

PepsiCo’s biggest bottler is keen on acquiring additional franchising rights of the beverage maker in India. RJ Corp already owns the franchise for PepsiCo's beverage business in the North and East regions.

Beverage and snacks maker PepsiCo has planned to reconsider its franchising strategy for betting the bottling business across the globe.

Chief executive PepsiCo Indra Nooyi said in post-earnings investors call that wherever the company ‘finds a good bottler which can run the business better than PepsiCo, the company will refranchise’. She was responding to an analyst query on refranchising plans in its bottling operations further in India.

She said, “Internationally, when we find a very good bottler and we believe that they can run the business better than us, we will refranchise the business. We look across our portfolio internationally to see where it makes sense.”

RJ Corp of South Asia, PepsiCo’s biggest bottler is keen on acquiring additional franchising rights of the beverage maker in India. RJ Corp already owns the franchise for PepsiCo's beverage business in the North and East regions. PepsiCo had also signed a distribution tie-up with RJ Corp promoted company Varun Beverages for Tropicana juices, Gatorade sports drink and Quaker Oats last month. Varun Beverages now owns PepsiCo’s bottling franchisee rights for 20 Indian states and two Union territories.

Nooyi said PepsiCo grew in “mid-single digits” during the October-December quarter in India, and that post the roll-out of the Goods & Services Tax (GST), the India market is ‘coming back’.

Stating that India and Mexico posted good mid-single-digit growth in the quarter, she commented, “Organic revenue growth outside North America was fuelled by continued strong performance in developing and emerging markets, which posted organic revenue growth of 7% as a group.”

For the fourth quarter ended October-December 2017, PepsiCo reported revenues of $1.89 billion for the Asia, Middle East, North Africa (AMENA) region, a 6% revenue growth. The Pepsi cola, Mountain Dew and Lays chips maker said in its earnings statement that the region was positively impacted by refranchising in Jordan, productivity gains and a gain on an asset sale in India.

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