Two company officials, who spoke on the condition of anonymity because of the sensitivity of the matter, say concern at Pepsi's Asia-Pacific headquarters over loss of market share to rival Coca-Cola as well as less-than-expected returns from Rs 160 crore spent on the sixth edition of Indian Premier League contributed to Anand's abrupt departure. This is the first time in the history of PepsiCo India that the head of the company has quit at such short notice, without a succession plan in place.
Anand's exit was announced internally on Thursday evening.
Anand said he had decided to seek early retirement. "I have decided to seek early retirement from PepsiCo. Though it's been two-and-a-half years at PepsiCo India as president, I have spent 19 years with the company. I just want some time out."
The sudden exit had nothing to do with performance, Anand claimed. "My decision to move out is personal...I am evaluating options," he said.
A PepsiCo India statement attributed Anand's exit to him 'deciding to join another company'.
PepsiCo's Market Share Fell to 29.7%
"His successor will be announced in due course," the statement added.
"Leaving PepsiCo is Manu's personal decision. It has absolutely nothing to do with performance," maintained a PepsiCo spokesperson.
According to industry insiders, PepsiCo India's overall share in April was lower than last year, with Coca-Cola managing to increase market share in the same period. "Loss of market share, at the time when the rival has grown, has been a serious concern," said the official quoted earlier. PepsiCo's market share in April this year fell to 29.7% from 32.1% over the same month last year, the two officials say, quoting retail audit numbers sourced and calculated from research firm Nielsen. Coca-Cola increased its market share to 48.3% from 45.8%, they said.
PepsiCo had been banking heavily on the IPL T20 and spent a record Rs 160 crore on the tournament, but according to Nielsen numbers quoted earlier, Coca-Cola grew faster in the period - which, insiders say, was the final trigger for Anand's exit. To match PepsiCo's heavy ad spends in the summer season, Coca-Cola has dropped prices of 200-ml glass bottles to Rs 8 in most markets. Coca-Cola has also been discounting heavily in sales to trade and pushing multi-serve packs such as 400 ml, 300 ml glass bottles and 500 ml PET bottles.
PepsiCo had paid the cricket board Rs 396 crore to buy title sponsorship rights for five years of the IPL starting this year -- double of what previous title sponsor, real estate firm DLF, had paid. The spend, media buyers, believe, over-estimates the potential of the controversy-ridden IPL.
The development comes a day after rival Coca-Cola announced the elevation of India CEO and president, Atul Singh, as deputy president, Pacific group, a role that involves him overseeing operations of over 10 countries including India and China. Singh is the first Indian to hold this post within Coca-Cola.
A note sent by Saad Abdul-Latif, CEO of PepsiCo Asia, Middle-East & Africa (AMEA) to PepsiCo employees, which ET has accessed, reads: "With Manu's departure and until a new president is announced, Gautham Mukkavilli, senior V-P and GM, beverages and Praveen Someshwar, senior VP and GM, foods, will report directly to me. In addition, all functional leaders will report directly to their functional counterparts at the AMEA sector headquarters in Dubai. The NourishCo joint venture with Tata Global Beverages will continue to report to the board of the joint venture."
Though beverages accounts for close to 60% of PepsiCo's revenues, beverages head Mukkavilli has not been named as interim successor to Anand.
"The company is in a mess. The execution on ground is not up to the mark," a former top PepsiCo India executive, asking not to be named, said. "I expect more heads to roll in the next few weeks," he added.
The company officials said PepsiCo has been unable to match Coca-Cola's aggression in the market, with its market share falling and profitability under pressure. Moreover, PepsiCo's newest and most ambitious launch in recent years, its second cola Atom, has not had the start the company expected.
Saad's note further added that the company has a team of "extremely talented and dedicated leaders, both operationally and functionally, who will continue to lead the business forward until a new president is named. Under this team's strong leadership, and with the commitment of all of our India associates, I believe the future looks bright for PepsiCo in this critically important market as we power ahead to achieve growth for both the short and long-term."
A bachelor in science degree holder in Physics from Delhi University, Anand had joined PepsiCo in 1994 as CFO of the foods division, Frito-Lay, and in 1998 was elevated as MD of the foods arm. He later relocated as GM of PepsiCo South East Asia between 2007 and 2010. He had succeeded outgoing chairman Sanjeev Chadha in January 2011.
