India’s demonetisation move has had a significant impact on PepsiCo’s India business in the fourth quarter.
PepsiCo Chairman and CEO Indra Nooyi, in an earnings analysis call on Wednesday, said “…demonetisation had a significant impact on our India business in the fourth quarter. And there are still some lingering effects. I’m not sure we are totally out of the woods,” she stated.
Nooyi said India saw a massive change because 80 per cent of its currency was taken out of circulation and the implementation had its share of challenges. Nooyi said that the company hopes that by the time the second quarter rolls by, “we would be through the bulk of the demonetisation challenges. And the new currency and the digital currency will be back in circulation and we’ll be back to normal retail activity.”
Nooyi is among several global leaders who had to fend off queries from analysts and investors this month on the impact of the government’s demonetisation decision.
Last week, Coca-Cola too said that the tough operating environment stemming from demonetisation is likely to persist at the start of the year before gradual recovery.
James Quincey, President & COO, Coca-Cola, who is also the company’s CEO-designate, said that it is a “one-off event” that effectively drained liquidity, but it will help in formalisation of the economy and will be good in the mediumlong term.
“We expect the short-term disruptions to mitigate or to tail off as we come into 2017, though not from January 1,” he added.
In response to demonetisation, Coca-Cola took various measures such as facilitating digital payments, extending credit to mitigate restocking and increasing emphasis on modern trade.