ITC versus PepsiCo India: Open season for juice wars in Indian market

The Kolkata-based giant signals that the last word is still to be spoken in the battle for brand supremacy in juices

The summer season has traditionally seen the cola brands slug it out aggressively for consumer mindspace. Combative ads, fight for retail shelf space and new launches have been the norm as players have looked to milk the Indian summer months for every drop of sales. But, as consumers get more health conscious, the cola fights seem to be losing their fizz and the juice brands are going head to head with claims and counter-claims. Driving these battles is the fact that the domestic juices category (also includes nectars), estimated at Rs 25 billion, is growing at around 25-30 per cent per annum and juices are being pitched as a healthy alternative to colas.

The first shots have been exchanged between ITC and PepsiCo India; ITC has claimed that its B Natural juice does not contain any concentrate, as against that of its rivals. In an ad that has since been taken down, the company had named PepsiCo’s Tropicana openly, which subsequently opened up the doors to a court battle.

The ads by ITC’s B Natural brand last week rattled PepsiCo enough to counter the claims with a legal suit. While this has forced the disputed ads to be taken down, ITC has also made it clear that while it will adhere with the court order, the last word hasn’t been spoken on the issue.

On Monday, the cigarette-to-consumer goods major signaled it would file detailed objections to PepsiCo’s suit and petition on May 9, the next court hearing. Parallely, said Hemant Malik, divisional chief executive, foods, ITC, the company would roll out new flavours as part of its ‘not-from-concentrate’ range. 

The campaign has been tagged #livehealthy and #nothingtohide. Clearly the stakes in the juice category are significant enough for the company to keep its battle fatigues on. In fact many companies are investing more in juices with targeted variants (low sugar to no sugar, raw pressed, detoxifying combinations and so on) and more advertising.

For ITC, the shift towards no concentrates began about a year back when the company decided to walk the talk on getting a healthier portfolio of products. “We started the not-from-concentrate initiative when we rolled out a pomegranate juice variant, which had 100 per cent fruit pulp. Most of our juices till then had 50 per cent fruit pulp and 50 per cent concentrate. We were clear that if we had to offer a truly healthy range of products to our consumers, all our flavours would have to make the transition to 100 per cent fruit pulp. That switch has happened now and we have all 13 flavours under the B Natural range consisting of 100 per cent fruit pulp,” he says.

ITC is expected to roll out its revised ad campaign highlighting this point shortly. Malik says the initiative requires education, since juices as a category are emerging quite rapidly in the country. “Internationally, not-from-concentrate is a well-established movement. In India, it will grow as awareness improves,” he says.

Are rivals buying the argument? Far from it. The broad view in the beverage industry, say sources, is that picking up an issue is fine, but dragging rivals into it is not. As an industry executive familiar with the issue said, “This is derogatory. You name a brand openly, inviting them to join your movement. How fair is that? There is also a presumption here that the category of concentrated juices is unhealthy. This isn’t correct.”

Harish Bijoor, chief executive officer, Harish Bijoor Consults, describes ITC’s move as “disruptive advertising”. He says the battle for market share will not only be between brands, but also categories. He cites Marico’s ad campaign for oats, which focuses attention on how instant noodles, a popular packaged food item in India, are deep fried and hence not a healthy option. This is an example of how disruptive advertising could change customer perceptions, he says.

Industry experts say that as packaged food and beverages grow in India, the marketing spiel will increasingly dwell around the premise of healthy vs unhealthy food habits. Even quick service restaurant (QSR) operators such as McDonald’s are speaking a similar language, pushing the health quotient with their menu.  

Last week, McDonald’s west and south India franchisee Hardcastle Restaurants, which is part of Westlife Development, announced that it was stepping up its effort to reduce sodium, oil and fats in its products, covering nearly 75-80 per cent of the menu in the process. While the entire menu would be adapted in the coming months, the company said more announcements were round the corner including work done to reduce sugar in its products.

Incidentally, PepsiCo has been at the forefront of this effort to reduce sodium and sugar in its products, unveiling last year the second leg of its ‘Performance with Purpose’ programme that envisages even more aggressive cuts in salt and sugar. Other brands have also announced ‘healthier’ options, signalling their desire to keep up with changing consumer needs.

While PepsiCo gave no hint on Monday regarding its strategy to take on ITC, or its claims in the coming months, it has upped the ante around juices this year. It is also expected to get more aggressive with its portfolio over the next two months, as temperatures rise to touch their expected stratospheric levels and consumers look to slake their thirst and yet, drink healthy.