12 ASIAN LEGAL BUSINESS – INDIA E-MAGAZINE JULY-AUGUST 2024 (Reuters) India has become the next big bet for PepsiCo, Unilever and other packaged goods giants looking to fill the growth vacuum left by an uneven recovery in China. With India’s economy expanding at the fastest pace among major emerging markets, companies are trying to serve its diverse palate by launching new flavours and size variants aimed at attracting the country’s vast population and untapped rural market. “While the last decade had companies focused on selling into China, the next decade is about selling into India,” said Brian Jacobsen, chief economist at Annex Wealth Management. “You have to go where the demographic and economic tailwinds are at your back.” Major consumer goods companies based in India, the world’s most populous country, are expecting higher government spending, a better monsoon season and a resurgence in private consumption to help consumer spending recover in the coming quarters. That is expected to boost the combined market share of the top five multinational companies - Coca-Cola, P&G, PepsiCo, Unilever and Reckitt - to 20.53 percent in 2023 from 19.27 percent in 2022, mainly in the baby care, consumer health, cosmetics, beverage and household categories, according to research firm GlobalData. Their total market share in China is forecast to shrink to 4.30 percent in 2023 from 4.37 percent in 2022, the data showed. “China went through a long and extended COVID ... they even went through a brief period of negative growth, and after this, growth has been very sluggish. In comparison to that, the growth rate in India hovering around 4 percent seems like a healthy growth for total fastmoving consumer goods,” said K Ramakrishnan, Managing Director, South Asia, at Kantar’s Worldpanel Division. Both the urban and rural segments in India have seen growth, but rural has fared a little better, he said. Consumer goods companies have also been pumping money into India with launches like PepsiCo’s Kurkure Chaat Fills, Coca-Cola’s packaging upgrades to increase the shelf-life of its products and Nestle’s plans to introduce its premium coffee brand Nespresso at year-end. As a result, Coca-Cola’s household penetration in India increased by 24 percent for the 12 months ended June, PepsiCo’s by 12.7 percent, Nestle’s by 6.7 percent and Reckitt’s by about 3.8 percent, data from Kantar showed. Mondelez International is partnering with the Lotus Biscoff cookie brand to sell its products and plans to launch new Oreo pack sizes. The company reported mid-single-digit percentage growth in the chocolate category in India in the second quarter. Coca-Cola also posted double-digit volume growth in India, while Unilever recorded sequential improvement in the country. PepsiCo’s Africa, Middle East and South Asia regions reported a rise, with the company expecting India to be the “big growth space” there. FROM PEPSICO TO P&G, INDIA BECOMES NEXT BIG GROWTH BET AS CHINA LAGS Deals $3 BLN Hyundai Motors India’s proposed IPO Deal Type: IPO Firms: Latham & Watkins; Shardul Amarchand Mangaldas & Co Jurisdictions: India, Korea $1.6 BLN Mankind Pharma’s acquisition of Bharat Serums and Vaccines Deal Type: M&A Firms: AZB & Partners; Khaitan & Co Jurisdictions: India, U.S. $1 BLN Vedanta’s QIP Deal Type: Capital Markets Firms: Cyril Amarchand Mangaldas; Khaitan & Co; Linklaters Jurisdiction: India $1 BLN Adani Energy Solutions’ QIP Deal Type: Capital Markets Firms: Cyril Amarchand Mangaldas; Latham & Watkins; Trilegal Jurisdiction: India $835 MLN CVC Capital Partners’ acquisition of stake in Aavas Financiers Deal Type: M&A Firms: Anagram Partners; Cyril Amarchand Mangaldas Jurisdictions: India, U.S. $734 MLN Ola Electric’s IPO Deal Type: IPO Firms: Cyril Amarchand Mangaldas; Latham & Watkins; Shardul Amarchand Mangaldas & Co; Linklaters Jurisdiction: India Image: REUTERS/Stephanie Lecocq
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