Documenti di Didattica
Documenti di Professioni
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BEVERAGES”
Submitted in partial fulfillment for the
MASTER OF BUSINESS ADMINISTRATION
1st Semester (2010-2011)
Submitted By
Razi
ur Rehman
Moh
d. Danish
The PepsiCo challenge (to keep up with archrival The Coca-Cola Company) never
ends for the world's 2nd carbonated soft-drink maker. The company's soft drinks
include Pepsi, Mountain Dew, and Slice. It owns Frito-Lay, the world's 1st maker
of snacks such as corn chips (Doritos, Fritos) and potato chips (Lay's, Ruffles).
Cola is not the company's only beverage: PepsiCo sells Tropicana orange juice
brands, Gatorade sports drink, and Aquafina water. PepsiCo also sells Dole juices
(licensed) and Lipton ready-to-drink tea (licensed from Unilever). Its Quaker
Foods division offers breakfast cereals (Life), pasta (Pasta Roni), rice (Rice-ARoni),
and side dishes (Near East). Wal-Mart is PepsiCo's largest customer,
accounts for 9% of sales.
PepsiCo may be vying for more Pepsi-drinking people but its hefty snacks and
juice sales help to quench the company's thirst for bottom-line growth. Frito-Lay's
salty snacks rule the US market; the snack division accounts for about one-third of
company sales.
The company announced a major restructuring in 2007, splitting its two business
units (Pepsi-Cola North America and PepsiCo International) into three: one for US
food, a second for US drinks, and a third for food and drinks abroad. CEO of
PepsiCo Indra Nooyi said that due to the company's healthy growth in recent years,
PepsiCo is approaching a size that can be better managed as three units rather
than
two.
The split looks like this: PepsiCo Americas Foods includes Frito-Lay North
America, Quaker, and the Latin American food and snack businesses; PepsiCo
Americas Beverages includes North American beverage sales, including Gatorade
and Tropicana; and PepsiCo International includes business in the UK, the rest of
Europe, Asia, the Middle East, and Africa.
With a saturated soft-drink market, the company continues to try new iterations: In
2007 the company introduced its first vitamin-enhanced water, called Aquafina
Alive. It signed a licensing agreement with Ben & Jerry's in 2006 for the sale of
Ben & Jerry's milkshakes in the US, as well as a deal with Starbucks for the
distribution of the coffee purveyor's Ethos water brand. Hot on the heels of Coke's
introduction of Blak, in 2006 Pepsi launched a coffee-flavored cola, named, Pepsi
Max Cino, in the UK.
Venturing further into the non-cola category, PepsiCo acquired sparkling juice
companies IZZE and Naked Juice in 2006. It also began selling Fuelosophy, a
smoothie drink, at organic grocery store chain Whole Foods, and struck a deal to
develop products with juice maker Ocean Spray Cranberries.
Bowing to the public's growing concern about childhood obesity, in 2006 Pepsi,
along with Coca-Cola, Cadbury Schweppes, and the American Beverage
Association agreed to sell only water, unsweetened juice, and low-fat milk to
public elementary and middle schools in the US. As for high schools, the
agreement calls for no sugary sodas to be sold and one-half of the offered drinks to
be water, diet sodas, lemonade, or iced tea. The agreement was facilitated by
former president Bill Clinton.
CEO Steve Reinemund stepped down as CEO in 2006 in order to spend more time
with his family. His replacement was Indra Nooyi, the company's president and
CEO. Indian-born Nooyi, the 11th female CEO of a FORTUNE 500 company, has
been instrumental in strategic decisions at the company, such as the acquisition of
Tropicana and merger with Quaker Oats.
Shortly after her appointment, Nooyi restructured the top level of power at the
company. She appointed John Compton, previously head of the Quaker-Tropicana-
Gatorade unit, to the newly created position of CEO for PepsiCo North America,
reporting directly to her.
HISTORY OF PEPSICO
1893--Caleb Bradham, a young pharmacist from New Bern, North Carolina,
begins experimenting with many different soft drink concoctions; patrons and
friends sample them at his drugstore soda fountain.
1902-- Bradham applies for a trademark with the U.S. Patent Office, Washington
D.C., and forms the first Pepsi-Cola Company.
1934--A landmark year for Pepsi-Cola. The drink is a hit and to attract even more
sales, the company begins selling its 12-ounce drink for five cents (the same cost
as six ounces of competitive colas). Caleb Bradham, the founder of Pepsi-Cola and
"Brad's Drink," dies at 66 (May27th, 1867-February 19th, 1934).
1941--The New York Stock Exchange trades Pepsi's stock for the first time.
In support of the war effort, Pepsi's bottle crown colors change to red, white, and
blue.
1960--Young adults become the target consumers and Pepsi's advertising keeps
pace with "Now it's Pepsi, for those who think young."
1970--Pepsi introduces the industry's first two-liter bottles. Pepsi is also the first
company to respond to consumer preference with light-weigh, recyclable, plastic
bottles.
1992-- Pepsi-Cola and Lipton Tea Partnership is formed. Pepsi will distribute
single serve Lipton Original and Lipton Brisk products.
1994-- Pepsi Foods International and Pepsi-Cola International merge, creating the
PepsiCo Foods and Beverages Company.
1997-- PepsiCo. announces that it will spin off its restaurant division to form
Tricon Global Restaurants, Inc. Including Pizza Hut, Taco Bell, & KFC, it will be
the largest restaurant company in the world in units and second-largest in sales.
In 1965, PepsiCo, Inc. was founded by Donald M. Kendall, president and chief
executive officer of Pepsi-Cola and Herman W. Lay,chairman and chief executive
officer of Frito-Lay, through the merger of the twocompanies. Caleb Bradham, a
New Bern, N.C. pharmacist, created Pepsi-Cola in the late 1890s.No single foreign
investment project has been the center of much attention and controversy in the
late 1980s and early 1990s as the Pepsi Co project in India. The project, Pepsi
Foods Limited, was cleared by the Indian government in September
1988 as a joint venture of Pepsi Co, Punjab government-owned Punjab Agro
Industrial Corporation (PAIC) and Voltas India Limited. Before this project was
cleared, PepsiCo made an attempt to enter into India as early as in May 1985,
when it teamed up with Agro Product Export Ltd., a company owned by R. P.
Goenka
group, and sought permission from the central government to import cola
concentrate and to sell a PepsiCo brand soft drink in the Indian market, in return
for the export of juice concentrate from Punjab. Under this proposal, the main
objectives put forward by PepsiCo were 'to promote the development and export of
Indian made and agro-based products and to foster the introduction and
development of PepsiCo products in India'. This proposal which was submitted to
the Secretary at Ministry of Industrial Development received rejections on the
grounds that the import of concentrate could not be agreed to and the use of
foreign
brand names as domestic tariff area (DTA) was not allowed.
Nevertheless, taking advantage of the ongoing political problem in Punjab at that
time, PepsiCo successfully played the 'Punjab Card' and again put forward a
proposal in 1986 with stress more on diversification of Punjab agriculture and
employment generation rather than on soft drinks. The proponents of project
called
it as a second 'Green Revolution' in Punjab and projected it as harbinger of a
horticultural revolution, which would end stagnation in Punjab's rural sector and
would help in promoting small and middle farmers. A strong argument was put
forward that this project will create ample employment opportunities for the
unemployed youth who has taken the path of terrorism and thereby will help in
restoration of peace in Punjab. This argument was well received in the political
circles in Delhi and Punjab, which finally led to PepsiCo’s entry into India in the
form of a joint venture with PAIC, and Voltas as its partners. The equity of Pepsi
Foods Limited was divided among the partners with PAIC holding 36.11 percent,
Voltas 24 and PepsiCo 36.89 percent. Coupled with the 'Punjab Card', PepsiCo
also made certain commitments to Indian government, which also formed the
basis
of its entry. Some important commitments made by PepsiCo included:
➢ The project will create employment for 50000 people nationally, including
25000 jobs in Punjab alone;
➢ The export-import ratio will be 5:1 over 10 years, which means that for
every dollar spends in foreign exchange on this project, the company will
ensure an export earnings of 5 dollars for 10 years;
➢ 25 percent of the total fruits and vegetable crops in Punjab will be processed
in the project;
PepsiCo entered India in 1989 and in the span of a little more than a decade it
became the country's largest selling soft drinks company. The Company has
invested heavily in India making it one of the largest multinational investors. The
group has built an expansive beverage, snack food and exports business and to
support the operations are the group's 43 bottling plants in India, of which 15 are
company owned and 28 are franchisee owned.
PepsiCo stays committed to providing its consumers with top quality beverages. Its
diverse portfolio of brands include the flagship cola brand - Pepsi; Diet Pepsi; 7Up;
Mirinda; Mountain Dew; Slice fruit drink; Tropicana brand 100% fruit juices in
various flavours; Aquafina packaged drinking water; Gatorade plus local brands
Lehar Evervess Soda, Dukes Lemonade and Mangola.
PepsiCo is also a dominant player in the snack food segment in India. PepsiCo's
snack food company Frito-Lay is the leader in the branded potato chip market. It
manufactures Lay's Potato Chips; Cheetos extruded snacks, Uncle Chips;
traditional namkeen snacks under the Kurkure and Lehar brands; and Quaker Oats.
PepsiCo is one of the largest MNC exporters in India and its export business
consist of three categories - agri business, commodities and Pepsi system sales.
PepsiCo has made significant investments with the Punjab Agriculture University
to develop a comprehensive agro-technology program that has helped thousands
of
farmers across India improve the yield of their farms and the quality of their
agricultural products. PepsiCo has leveraged its knowledge in contract farming to
develop seaweed cultivation in Tamil Nadu and has partnered with the
Government of Punjab to help farmers of the state through the utilization of
developed technology for citrus farming. As part of its sustainable development
initiatives, PepsiCo India has been a
committed leader in the promotion of rain water harvesting, water conservation
recycling and the reduction of effluent discharge. PepsiCo has also established
zero
waste centers and PET recycling supply chains and assisted victims of natural
disasters. PepsiCo stays dedicated in its endeavor to develop community outreach
programs by supporting rural water supply schemes, administering medical camps
in villages, providing computers to rural schools and creating opportunities for
women in rural areas through vocational training as an alternate means of
livelihood.
Pepsi
Diet Pepsi
Pepsi Aha
Slice
Mirinda
7-Up
Aquafina Mineral Water
TYPES OF PRODUCTS:
Non-alcoholic soft drink beverage market can be divided into fruit drinks and soft
drinks. Soft drinks can be further divided into carbonated and non-carbonated
drinks. Cola, lemon and oranges are carbonated drinks while mango drinks come
under non-carbonated category. The soft drinks market till early 1990s was in
hands of domestic players like campa, thumps up, Limca etc but with opening up
of economy and coming of MNC players Pepsi and Coke the market has come
totally under their control. While worldwide Coke is the leader in carbonated
drinks market in India it is Pepsi which scores over Coke but this difference is fast
decreasing (courtesy huge ad-spending by both the players). Pepsi entered Indian
market in 1991 coke re-entered (After they were thrown out in 1977, by the then
central government) in 1993.
Carbonated soft drinks major Pepsi India is now putting together a ‘cocktail’ to
take a bigger ‘slice’ of the fruit juice market. Close on the heels of the launch of its
global lemon drink Twist in an Indian avatar as Pepsi Aha, Pepsi, once again, is all
set to roll out another global product—in a localized version. Come June 2002, and
Pepsi will roll out the blends of its international fruit drink Twister in the country,
albeit, with a difference. In India, Twister blends will be launched as mixed fruit
cocktails under Pepsi’s existing juice brand Slice. Pepsi spokesperson, when
contacted, confirmed the launch but said the products will be launched on an
‘experimental basis’ for three to four months beginning June 2002. However,
confirmed sources said that the product has been test-launched and is ready for a
formal launch in June. Globally, the proposed Slice fruit blends exist under Twister
brand and are available in over 10 flavors and in various packaging options.
However, in India, while the blends will be decided as per local tastes and as per
the availability of fruit pulp, packaging will be restricted to cartons only. Among
the four to five flavors planned, strawberry-peach and kiwi-guava are some of
them. However, the new product could be priced a little higher than Slice since
Twister—originally—is believed to have more than 15 per cent juice content.
Slice, on the other hand, is a 15 per cent juice drink positioned at the mass-end;
against the 100 per cent fruit juice Tropicana, which is at the top-end. Pepsi’s
decision to launch Twister flavors as Slice variants rather than the original brand
itself follows the company’s decision to make Slice the mother juice brand in
India.
The company had at one time contemplated bringing Twister in its original self to
India but the plan was later shelved. “Internally we have been debating whether to
go ahead with Twister or keep Slice as a mother brand for juices,” the Pepsi
spokesperson said. The move, point out industry observers, is clearly aimed at
saving costs of launching an altogether new brand and instead cash in on the
potential of a existing juice brand. A Rs 200-crore brand, Slice was originally
launched as a mango drink in returnable glass bottles. Last year, in fact, Pepsi
launched a new advertising campaign to rejuvenate the brand’s mango
positioning.
And early this year, it was launched in cartons and more recently—three new
flavors—orange, leechi and guava—were added to the brand.
Burdened by high cost of production of returnable glass bottles, Pepsi India has
decided to look at the most sought after packaging alternative—flexible packaging
—more seriously. The company through one of its prime bottler Mr. Ravi Jaipuria
of Varun Beverages Ltd is now setting up a new carton line (tetrapack) at its
existing bottling plant at Noida in Uttar Pradesh.
The plant with a capacity of 5,000 to 7,000 cases per day will be used to pack
Pepsi’s juice drink Slice and its new variants in 200-ml cartons. The product is
currently being packaged at Varun Beverages at Boranada Road Jodhpur.The
Noida slim line carton plant—which is expected to take off shortly—will cater to
the north market and will help the company cut huge transportation costs.
Products, Operations & Technology:
While carbonates are still the largest soft drink segment, bottled water is catching
up fast, with an average of 58 liters consumed annually per capita. Among
individual countries, Italy ranks number one in bottled water consumption, with the
average Italian drinking 177 liters per year. Overall, bottled water represents the
fastest growing soft drink segment, expanding at 9 percent annually. This growth
is
being partially driven by increasing awareness of the health benefits of proper
hydration.
The industry has responded to consumers’ desire for healthier beverages by
creating new categories, such as energy drinks, and by diversifying within existing
ones. For example, the leading carbonated soft drink companies have recently
introduced products with 50% less sugar that fall mid-way between regular and
diet classifications. Similarly, a South African juice company has recently released
a fruit-based drink that contains a full complement of vitamins and nutrients.
Sales and Marketing Hierarchy of PepsiCo India
ME………………Marketing Executive
CE………………Customer Executive
MDC…………….Marketing Development Coordinator
ADC……………..Area Development Coordinator
MDM…………….Marketing Development Manager
TDM……………..Territory Development Manager
UM……………….Unit Manager
MUM……………..Marketing Unit Manager
RECOMMENDATION
• The Sales and Distribution Network of Pepsi is very strong and almost
flawless.
• PepsiCo India had the first mover advantage when it entered the market and
it capitalized on that advantage to grab the market.
• Franchisee based operations combined with the Company’s operations add
strength to the overall presence of the Company in the market.
• Promotional activities within every territory are under the territory office
and the officials of that office are responsible for the effectiveness and
successful implementation of these campaigns.
• Because of fierce competition PepsiCo has spend heavily on Ads in order to
increase the brand recall and successfully face the competition.
• Pepsi has good brand image and recall in the customer’s mind but the most
surprising thing is that when compared with Coke, Pepsi lags behind in
terms of brand image.
• PepsiCo is finding it difficult to counter the competition from Coke in
carbonated Beverages Segment but it has distinct advantage and upper in
almost all the other segments like snack food, non carbonated beverages,
sorts drink, restaurants etc.
• Diet Pepsi even though newly introduced hasn’t yet caught up with Diet
Coke the way it should.