Chennai: In order to meet changing customer preference towards healthier fruit and milk based drinks beverage and snack company $35-billion turnover PepsiCo is planning to get into the white drinks - milk- or soya-based drink - category.
Addressing the media in Chennai, Indra K Nooyi, chairman and CEO, PepsiCo, said, "It is not that the full sugar drinks are not growing. Along with their growth, zero sugar drinks like Diet Pepsi, special drinks like Gatorade and fruit juices are growing. Apart from launching new fruit juices we would like to enter the white drinks market with milk or soya milk products."
While she did not commit a time frame for the launch, whenever the company enters the market it will end up crossing swords with Nestle, Britannia, Amul and the state milk federations like Aavin, in Tamil Nadu, Vijaya, Andhra Pradesh and private dairies like Heritage and Hatsun Agro Products Limited, Chennai.
Saying that Indian operations are small in PepsiCo's global operations Nooyi said, "The market is promising. India, China and Pacific Rim countries house huge population and an important future market for us."
Interestingly nearly 36 per cent of PepsiCo's revenue comes from non-US markets and it is expected to go up to 53 per cent in a decade. To achieve this growth the company is changing tact and launching products that suit local preferences and tastes.
In order to take the sting out of the criticism that the snack foods are junk foods that induce obesity, PepsiCo has switched over to snack foods without trans fat.
In India the company has switched over to rice bran oil to fry its snack food from artery clogging palm oil. Overseas the company now uses sunflower oil.
"All these years we were not able to find a source for rice bran oil in India to meet our needs. Now that we have found we have moved over to the new frying medium," said Gautham Mukkavilli, managing director, PepsiCo India Holdings Private Limited, FritoLay division.
According to Nooyi, the ensuing fiscal is going to be challenging as PepsiCo will have to innovate and launch new drinks and snack foods.
The other major challenge is the increasing commodity prices that would impact the bottomline.
She does not want to mention any numbers as to the probable bottomline impact the price rise would have, especially since food grains, in the US, are increasingly being diverted to make bio-fuels for automobiles, resulting in price increase for the food product companies.
PepsiCo sources large quantities of commodities like wheat, maize, oil, soya, potatoes, and other food grains for its snack foods.
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