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Pepsi Remains Bullish on India’s Restaurant & Hospitality Industry

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Speaking on the occasion of the presentation of Pepsi-IMAGES Food Service Awards at India Food Forum recently, Shailee Chatrath Tyagi, Director, Organised Trade Channels, Pepsico India Beverages, said that the growth rate for India’s food service industry has already come back to the 2019 pre-covid numbers and it looks set to gain faster momentum in the days ahead.
Read edited excerpts of the interview:  

Tell us about Pepsi’s association with India’s food service industry and how it has evolved over time? 

Pepsi has long been associated with India’s food service industry.  Ever since we entered India in the 1990s we have been associated with food service. Some of our legacy partners like KFC, PVR cinemas, and Pizza Hut entered India with us and that legacy of partnership with such players has continued till this day. As more and more international brands like Burger King and Taco Bell have entered India in recent times, they have always chosen Pepsico as a preferred beverage partner.

Pepsico considers the food service channel as an integral part of its ecosystem. “This is because 50% of the beverage consumption occasions for the category are actually out of home, which is defined as travel, workplace, cinemas, restaurants … so the out-of-home channel really defines a very large part of our consumption occasions and, globally, the away-from-home channel is an important part of the company’s growth model. In India, likewise, we’ve really built the away-from-home channel as a channel of strength for us. 

When we look the food service industry evolution, I think it has gone through a phenomenal change in recent times. Pre-covid, of course, there was a huge momentum and, then came an unprecedented, unthinkable event that really caused a pause…suddenly out of home was locked out and it really impacted businesses, people’s lives, and we saw that it could not have been dealt with otherwise but with a lot of empathy.  Being at the forefront of the seismic shift in consumption and consumer behavior triggered by the pandemic, we also launched a social cause initiative called Pepsi Save Our restaurants, whose aim was to help restaurant workers deeply impacted by the first wave of covid. 

Looking back, I see the food service industry has become stronger and more resilient than before. When the first covid wave hit, it took the industry almost three to four quarters to bounce back. When the second wave hit, it took almost a quarter to come back and this time around with the third wave hitting in January, the industry has taken about 30 to 45 days to bounce back. As a matter of fact, the industry has been witnessing an unprecedented traffic back into restaurants, into cinemas, into travel, into hotels, and everybody in the food service industry feels very excited about good times coming back again. 

There is news that the growth is now above the 2019 pre-covid numbers, which shows that consumers are really coming out and that the growth is going to be much stronger here onwards.   

Which are the strong trends that we can expect to play out for the industry?

I feel that the one really strong and visible trend emerging is the massive pent-up demand of consumers getting released. This trend is very visible right now as we see people coming out and enjoying themselves. Getting together with friends and family and enjoying occasions like the IPL and the festivals have all found a new meaning with restrictions on movement coming down. So, after a gap of two years, people are getting a sense of the perfect summers, a perfect IPL, and the food service industry is really leveraging these occasions to the best by creating occasion-led themes and properties.

Another strong trend is the boom in food service innovation with lots of curated menus designed around festivals like Holi and Diwali, and occasions like IPL being leveraged to the hilt. In the last two years, we have seen that brands that survived were those that transformed not just their business models but their menus and their processes in terms of the adoption of data in a big way; innovation in the use of new ingredients; and going for culinary innovations like fusion foods, among others. That’s why we are seeing new food launches — momo mia and momomia pizzas; plant-based protein pizzas; fusion mocktails…

Another important trend is the rise of organized food service over unorganized food service. So we are seeing that consumers are trusting brands more than ever, and they are looking for standardization and consistency and that’s why they are trusting not only global but also some of the homegrown brands.  

We are also seeing an unprecedented digital e-commerce adoption. Due to the imposition of recurrent lockdowns, people adopted e-commerce like never before. Also, the proliferation of payment gateways has created a strong infrastructure and then there is this entire app-based economy that has come into play. So, all the food service brands that have adopted this digital transformation and are at the forefront are also really benefiting from the trend.