Overseas sales may catch up with US: Nooyi

PepsiCo Inc, the world's second- largest soft-drink maker, may sell as much soda and chips overseas as in North America within the next five years, Chief Executive Officer Indra Nooyi said.

International revenue, which made up 37 per cent of PepsiCo's $35.1 billion total last year, is growing at four times the pace of the US and Canada as the company sells crab-flavored Lay's in China and lentil snacks in India.

Growing internationally will help PepsiCo reduce its reliance on the US, where it gets the majority of revenue, compared with 30 per cent for Coca-Cola Co. PepsiCo has made a dozen overseas acquisitions since 2000, and plans more purchases as health-conscious consumers in the US cut back on soda and Fritos.

"I suspect it's going to be somewhere around 2010 or 2012, in that area, where it might catch up,'' Nooyi said in an interview at PepsiCo's headquarters in Purchase, New York. "At its current trajectory, around that time, you could see a potential catch-up.''

PepsiCo trails Nestle SA in global snack and beverage sales, while Coca-Cola leads in sales of soda.

China, the world's most populous country, is the "biggest prize in terms of growth,'' Nooyi said in an October 17 interview on "Conversations with Judy Woodruff.''

PepsiCo introduced Tropicana juice and Lipton tea to China, and began selling Frappuccino bottled coffee drinks, made in partnership with Starbucks Corp, in China this week. "It is the single largest expansion market for us,'' Nooyi said. "And the per-capita consumption of our products is so low. Just giving them all of our products, one serving a day, will keep this market going for many, many years.''

PepsiCo's sales in China have increased 10 per cent or more each quarter this year. Chinese consumers drink about 32 sodas a year, while Americans drink 814, according to data by Beverage Digest, an industry journal.

"Pepsi has shown a certain willingness to adapt to the local taste preferences,'' said Mariann Montagne, an analyst with Thrivent Asset Management in Minneapolis, which holds PepsiCo shares among $71 billion in assets. "Indra's done a terrific job acquiring brands and expanding territories. Over the next 10 years, we'll have a company dominated by snacks and international growth.''

Activists, Soda Bans
PepsiCo posted gains of at least 10 per cent the past two quarters in India, erasing declines last year after some Indian states banned soda because an activist group said it found pesticide residue in PepsiCo and Coca-Cola beverages. An Indian court later overturned the bans.

Dealing with activists is a "labour of love,'' said Nooyi.

"Sometimes, they may be right. On some issues, they may be overreacting,'' she said. "It doesn't matter. You've got to deal with them, understand their point of view.''

PepsiCo has also been criticized in the US, where some parents and advocacy groups say sugary drinks contribute to childhood obesity. The companies last year agreed to halt soda sales and limit calories and package sizes of teas, sports drinks and juice at schools.

The company has also made more baked versions of Lay's and Cheetos, and developed fruit and vegetable chips called Flat Earth to win back consumers who are watching their diets.