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PepsiCo Egypt CEO feels bullish about regional growth: ‘The opportunities are huge’

PepsiCo recently announced a US$100m capital investments in Egypt, and its confidence in the country’s growth potential is unshaken even by coronavirus, says the CEO of PepsiCo Egypt.

With a population of 100 million, Egypt is one of PepsiCo’s biggest markets in Africa and the manufacturer intends to use the country’s centralized location as a gateway into north and central Africa, according to Mohamed Shelbaya, the CEO of PepsiCo Egypt.

Earlier this month, the manufacturer announced a $100m capital investments to expand its infrastructure and manufacturing capabilities. The soda-to-snacks maker will initially focus on adding five production lines to existing eight plants.

It also intends to increase the number of local farmers it works with – currently around 5,000 – to source potatoes for its Chipsy (Lays) local brand and digitize its supply chain by investing in cashless operations. This is in addition to increasing number of distribution centres to accommodate the increase in production capacity.

The recent $100m capital investments are part of an overall $515m investment announced in 2018 that will be rolled out until 2021.

“The reform programme that the government undertook in 2017 has started to pay dividends. Inflation is down to single digits and unemployment is down. The GDP projection is very promising for the coming three years [and] makes Egypt one of the fastest growing economies in the world before COVID-19, at a similar level to India and China,” Shelbaya told The Ingredients Network.

“With COVID-19, we see it will be around 2 to 3%, which is still growth. Developing markets, on the other hand, are in the negative. So, the opportunities are still huge in this population.”

Shelbaya attributed part of PepsiCo’s success in Egypt to the dialogue between the public and private sector, and the recent capital investments were announced at a meeting between Shelbaya and Mohamed Abdel-Wahab, CEO of the General Authority for Free Zones and Investment.

“Our voice is getting heard and the government understands it’s still a difficult market to operate in so they listen to how they can improve for investors,” Shelbaya said.

New product launches & clean label concerns

With around 21% of Egyptians between 18-29 years old, the North African country’s booming young population is another reason behind PepsiCo’s long-term confidence in the market.

Generation Z and millennials have been particularly receptive to recent product launches, such as its Pepsi Black, sweetened with aspartame and available in raspberry and lemon flavors, the CEO said.

Although clean label concerns are not a priority for most Egyptians, adapting products to local tastes is important to capture the market, particularly for snacks, he added.

“It’s a price sensitive market, more than 30% of the population is below the poverty line and the middle class in Egypt has collapsed. At the minute, value is key for consumers,” he said. “Our snacks business is very localized, we aim to offer the flavors consumers prefer whether they are from local cuisines or international dishes. We do a lot of research and testing to get the taste that is liked and appreciated by the public. With potato chips, you can really innovate and play with flavors.”

In Egypt, for instance, street food is hugely popular and so the manufacturer launched a line of potato chips flavored with popular street food dishes, such as shawarma, kibda liver and kebabs.