PepsiCo Inc does not expect the US financial crisis to hit its business and will invest a further $500 million in India over the next three years as part of its focus on fast-growing emerging markets, its chief executive said on Sunday.
But high commodity prices and global inflation remained a worry for the maker of Pepsi-Cola, Frito-Lay snacks and Quaker Oatmeal and could weigh on margins in the short-term, Indra Nooyi, also the chairman of the company, told reporters at a news conference near India's capital.
"The problems of Wall Street has not rippled over to the main street," she said, ahead of a two-day meeting of the company's 26-member senior leadership team in India. "Our business continues to be quite robust."
"We generate a lot of cash. Definitely it is very, very healthy. I don't believe the problem of Wall Street will ripple over to companies like us. I am happy to say that."
Soaring commodity prices have put pressure on food and beverage makers, even though PepsiCo's wide range of products and business in many countries have helped it to have an easier time offsetting the industrywide pressure. However, Nooyi said it might not be possible to cover all the cost pressures through price increases in the short-term.
"When you have 10-11 percent inflation, it's very hard to cover all of the inflation through pricing in the short-term as you have to worry about the value for the consumer," she said. "Clearly short-term margins do get affected. But you never try to manage just for the short term. You manage for the long term."
INDIA BOOST:
Pepsi and its bigger rival Coca-Cola Co increasingly rely on developing markets like China, India and Russia for growth, as North American sales of traditional soft drinks like colas have slowed amid a growing consumer emphasis on health and an economic slowdown.
PepsiCo, based in the New York City suburb of Purchase, derives 40 percent of its revenue from outside its home country. Its international unit chief executive Michael White said emerging markets contribute to 60 percent of growth of the international business.
"As a tangible sign of our continued confidence in India, I am delighted to announce that we seek to invest a further $500 million over the next three years with the goal of tripling our business," India-born Nooyi said. PepsiCo, which entered India in 1989, has invested more than $700 million in the country so far and expects its revenue from the country to triple in five years.
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