PepsiCo's new India head D Shivakumar sends out morale-boosting letter to employees

NEW DELHI: PepsiCo's new India head D Shivakumar told employees that the company "cannot afford to lose a day" and called for "relentless execution", drumming up enthusiasm among staff in the battle for market share with Coca-Cola and other rivals as he takes over the local unit of the beverage and snacks maker that has been without a chief executive for about half the year.

"We are a daily market share business much like newspapers, milk, cigarettes and airline seats. These industries cannot afford to lose a day. Hence, the key is relentless execution," Shivakumar said in a letter to employees that ET has seen. 2014 is a "must-win" year for the company, he added. "We need to give it all we have."

The note tries to send out a positive signal, said two mid-level employees who didn't want to be named.

Rocky Year for India Unit

"Shiv's first letter indicates he is one of us... and that everyone in the company can directly reach out to him," one of them said. Asking employees to "teach" him the business, Shivakumar said he wants to "learn and contribute".

The year has been a rocky one for the Indian unit. Manu Anand exited the company abruptly in June to join Cadbury Kraft, leaving the post of chairman and CEO vacant until former Nokia India chief Shivakumar took over earlier this month.

Further, the firm's biggest investment in sport - the Indian Premier League Twenty20 tournament - got mired in controversy over spot fixing, leading to a good deal of discomfiture. Pepsi has paid 400 crore over five years for sponsoring the IPL.

PepsiCo's global chairman and CEO Indra Nooyi told ET in an interview last month that she would want the firm to be associated with a sport with "no controversy". In addition to this, the economic slowdown has cut into sales as consumers keep a tighter check on discretionary spending than before, although this would have had an equal impact on rivals as well. Besides this, growth of soft drinks has slowed to single digits as early rain cut summer short. Shivakumar’s immediate mandate is to accelerate consumption of colas and snacks in an economic environment that’s still in the doldrums.

However, finance minister P Chidambaram and central bank governor Raghuram Rajan both expect growth to strengthen in the second half of the year, partly because good monsoon rains are expected to boost farm income.

Meanwhile, the snacks business is getting increasingly fragmented with established rivals such as ITC and Parle chipping away at PepsiCo’s share, and several smaller companies such as Balaji and Bikaji emerging as strong contenders.

Shivakumar, an alumnus of the Indian Institute of Management, Calcutta, shouldn’t run short of money when it comes to pursuing the company’s ambitions aggressively.

Nooyi said last month that Pepsi will invest Rs 33,000 crore ($5.5 billion) in the country by 2020 on manufacturing, infrastructure and product innovation, reflecting the importance of India as a market for the company, which is running up against resistance to sugared sodas in developed countries.

Shivakumar, who has worked in Hindustan Unilever and Philips, urged the Pepsi team to “execute plans with conviction” and said that the strategies of divisional leaders Gautham Mukkavilli, Praveen Someshwar and Pratik Pota are robust.

Mukkavilli is CEO of the beverage business, Someshwar heads the food business and Pota is in charge of NourishCo, a joint venture with the Tatas.

Shivakumar told ET soon after his appointment that he was “fundamentally an institution builder, team player and very much a brands person”, Previously managing director at Nokia India and then senior vice president for India, Middle East and Africa, he is the first outsider to take over as CEO at Pepsi since 2006, when Rajeev Bakshi quit.