In a bid to continue building the “PepsiCo” brand in Pakistan and to raise awareness among masses regarding size, scope, investments and challenges, following is the interview with daily The Nation that shares PepsiCo footprint in Pakistan, key ingredients of success, challenges and potential to grow.
Question: Who is Qasim Khan? Can you share your personal journey from the perspective of a leader of Pakistani descent in PepsiCo?
Answer: Qasim Khan born in Rawalpindi and educated at Lawrence College, Murree and the Punjab University Lahore. After graduating from the Punjab University Qasim went to US and received his bachelors and masters degree in business from Michigan State University. He is one of the senior executive leaders at PepsiCo (the global food and beverage giant) leading the PepsiCo businesses in NASA Business Unit, which includes Japan, Korea, Thailand, Indonesia, Philippines, Malaysia, Singapore, Pakistan, Pacific Islands and Mongolia. Prior to Pepsico, Qasim worked for Procter & Gamble based in Geneva, Switzerland.
Q: What do you feel are the key strengths of PepsiCo as a global Food and Beverage company?
A: Some of the key strengths of PepsiCo are:
* PepsiCo offers world’s largest portfolio of billion-dollar food and beverage brands. Brands are our lifeblood
* Diverse Portfolio offerings ranging across different consumer preferences.
* One of the largest and most robust agricultural enterprises in the world.
* Our investments in emerging markets.
* Strong execution: We operate over 100,000 routes directly or through our bottlers worldwide. Through those delivery routes we serve about 10 million outlets around the world.
Our local management teams have a very good feel for their markets and that informs our execution and our strategy as a company.
* Highly Integrated System: we have tremendous size and scale, an unparalleled portfolio, a strong revenue mix, incredible reach and a highly integrated system.
* Passionate people and global careers: Everything we do is brought to life by diverse teams across the world. Our ability to attract, retain and train them is essential towards building a great organisation.
Q: What is the current size and scope of your business in Pakistan?
A: PepsiCo International is intricately linked towards the development of the corporate sector in Pakistan as we were one of the first multinationals to start operations in Pakistan in 1967. Now we are biggest food and beverage company in terms of retail turnover in Pakistan. On the beverages side, we follow a franchise model and to date have 7 franchises all over Pakistan. We also brought in Foreign Direct Investment in the shape of a concentrate plant set up in Hattar. By focusing on innovation and strong go-to-market excellence Pepsi became the market leader in 1982 and has since then sustained that position. Today, Pakistan is the 6th largest market for PI worldwide and we have three brands; Pepsi, Dew and 7-UP which are bigger than our rivals in terms of volume contribution. Pepsi is ingrained as a household brand while our contributions towards the development of sport, specifically cricket and music industry is unparalleled. We have been the pioneers of developing both these industries while strengthening our beverages brands over the past many decades.
Since 2006 we also introduced the famous Lay’s potato chips brand in Pakistan by investing in a state of the art plant which employees over a 1,000 people. Within five years of operations, the brand has become the largest salty snacks brand in Pakistan and continues to grow at high double digit rate. Our manufacturing facility located at the Sundar Industrial Estate, Lahore supplies our products to a distribution network spread all over Pakistan. We have made strong investments in the agricultural sector of Punjab by introducing latest technologies for potato growers and are looking to expand potato growing into the northern areas of Pakistan. We also plan to export potatoes to other countries around the world. Our snacks portfolio consists of leading global brands like Lays, Cheetos, Kurkure and Wavy.
PepsiCo businesses cause the employment of over 20,000 people nationally.
Investment: To date we have invested over $1 billion into Pakistan over the years.
Q: What have been the ingredients of success for PepsiCo in Pakistan?
A: Our success in Pakistan is a combination of multiple things:
1) Strong global brands, great brand building and execution.
2) A product portfolio that is advantaged towards growing further in the future.
3) Very strong, focused and competitive bottling partners and an extremely robust distribution network that has been developed by them.
People and Talent at PepsiCo and in Pakistan in general: People are extremely optimistic, extremely resilient, extremely ambitious, extremely hard working and strongly entrepreneurial in nature.
Q: What were the major reasons you decided to invest in Pakistan?
A: Pakistan’s opportunity is driven from the following facts:
Large Market: 6th most populace country in the world with approximately 70pc population under the age of 30.
Trained Workforce: A large trained and productive population represents a big opportunity to Pakistan to benefit from its demographic dividends. Investment Policies: Pakistan’s policy trends have been consistent with liberalisation, de-regulation, privatisation and facilitation being the cornerstones of its policy.
Geo-Strategic Location: It can be a gateway between the energy rich Central Asian States, financially liquid Gulf States and technologically advanced far eastern states. This alone makes Pakistan a market teeming with possibilities.
Incomes on F&B: A significant amount of individual incomes (as high as 40pc) are spent on food and beverage representing a huge opportunity for the industry.
Q: How do you currently see the business environment in Pakistan?
A: The energy shortage, high inflation and high interest rates for local partners are the biggest roadblock towards any company evaluating putting up a manufacturing facility in Pakistan. So, the business environment is tough currently. However in the same breath the potential that Pakistan presents is immense and multinationals who have been in Pakistan for some time understand this very well. An improvement in the investment environment will only make our job easier to convince investors to come to Pakistan.
Q: What are your current challenges in Pakistan?
A: Like any industry, we have some food and beverage specific challenges and some general macroeconomic challenges.
1. IPR: We have a lot of potential in Pakistan around agro based industries. However, Pakistan currently does not have any law around the IPR protection of seed varieties. This limits our ability to expand our agro programme on the foods side as it is become difficult to introduce our own potato seed varieties.
2. Taxation: Pakistan has one of the highest taxes on beverages in the world. We are the only food category product to have an excise tax on it. In a high inflationary environment, this seriously inhibits are ability to invest and expand employment.
3. Need for Level Playing Field: Ensure that all companies pay the required taxes. In addition to discouraging further investments, this acts as a major public revenue loss for Pakistan. We recommend that Government of Pakistan form a task force to ensure all players comply with the quality and taxation laws in our industry.
4. Energy Shortage: This impacts our business significantly and limits further investments.
Q: What advice would you provide to companies seeking to invest internationally or Pakistan specifically?
A: Do two things:
* Visit Pakistan yourself to see the passion of the workforce and the potential of this great country.
* Get the experiences of other multinationals operating in Pakistan. I am sure you will be impressed.