Pepsi 4Q16 Earnings Call Notes

Indra K. Nooyi

Demonetization had a significant impact

“And on demonetization, across the board for pretty much all of industry and CPG in particular, because it hit the individual retailers significantly, demonetization had a significant impact on our India business in Q4. And there’s still some lingering effects. I’m not sure we are totally out of the woods. It’s a big country, a massive change because it’s currency that was about 80% of the circulation out in the country that was taken out of circulation, and the implementation had its share of challenges. So our hope was that by the time Q2 rolls by, we would be through the bulk of the demonetization challenges. And the new currency and the digital currency will be back in circulation and we’ll be back to retail activity coming back to norma”

I don’t believe that political actions impact consumption of our products

“We are basic food and beverage. I don’t believe political actions impact consumption of our products. And we’re not seeing any deterioration in activity versus our products, and the market growth continues.”

Hugh Johnston

Do expect to see higher inflation

“As we look forward into 2017, in the first half in particular, before we lap the inflation that we saw in 2016, we do expect to see a higher level of low single-digit inflation in commodities. And that combined with our annual pricing outlook will probably result in a bit of pressure on gross margins.”