VBL, which accounts for over 85% of PepsiCo’s beverage sales volume in India and manufactures and distributes Pepsi, Mountain Dew and Tropicana juices, reported 5.7% year-on-year volume growth in the quarter ended December 2020.
Japuria said further stabilisation of the macro-economic environment will translate into strong growth for the company.
Sequentially, VBL’s sales volumes had declined by a steep 46.4% in the peak April-June quarter amid peak lockdown months, and 4% decline in the following September quarter. The spread of the pandemic caused significant disruptions in business operations across the soft drinks sector, particularly during the seasonally strong April-June quarter, but VBL has seen steady recoveries and expects the momentum to continue. “With overall economic activity picking-up sharply across the country, there is an improved consumption trend being witnessed on a month-over-month basis. This bodes well for all our product categories over the medium-to-longer term,” Jaipuria said.
Analysts said while in-home consumption contributed significantly to revival in the December quarter, re-opening of markets and transit points also signals revival in out-of-home consumption in the current year.
“Recovery in economy and higher in-home consumption were key reasons for strong volumes. We believe when business activity returns to normalcy, some consumers will still continue with higher in-home consumption,” ICICI Securities wrote in a note on Wednesday. It flagged steep rise in competitive pressures and delay in launch of new products as risks which could hurt VBL’s earnings.
