 "Pepsi banks on power of seven brands")
Like the seven samurai in the Akira Kurosawa classic, seven brands of PepsiCo India will be the focus of the country's leading food and beverage maker, as it aims to create a power club.
Five beverage and two food brands, all of which have reported retail sales of more than Rs 1,000 crore annually, will now drive PepsiCo India's investment and innovation strategy.
The power brands for PepsiCo India are beverages Pepsi, 7Up, Tropicana, Mountain Dew and Mirinda, and Lays and Kurkure in the food segment (see chart). Besides these brands, PepsiCo's packaged water, Aquafina, also has sales of about Rs 1,000 crore.
PepsiCo India's strategy is similar to that of Hindustan Unilever (HUL), the country's largest consumer goods company. In 2001, HUL introduced its power brands strategy, focusing on 30 key brands, before abandoning it and then going back to it again. In the past few years, companies such as Tata Global Beverages and Mumbai-based Jyothy Laboratories have also adopted a power brands strategy, choosing to keep their attention on a few products.
Other PepsiCo India brands such as Aquafina, Quaker (oats, muesli), Duke's (a fizzy drink popular, especially at Parsi eateries), Gatorade (an international sports drink), Lehar (indigenous snacks), Cheetos (extruded cheese snacks) and Uncle Chipps (potato chips) - all popular in their segments - have not been included in the list of power brands.
Inclusion on the list means PepsiCo will drive much of its investments around these products, building them as key platforms, which will facilitate brand extensions and innovations, both in packaging and flavouring.
D Shivakumar, chairman and chief executive officer, PepsiCo India, told Business Standard: "You can have a purely local strategy - then, you end up with 30 brands in every single category. This is unviable."
He added, "Or, you can have a national brand, with regional blends. Typically, companies such as us that are represented nationally, go for a national brand, with regional blends."
The strategic move of the company focusing on a few key brands is in line with its objective of rationalising expenditure on advertising and marketing.
For the financial year 2014-15, PepsiCo India spent Rs 854 crore on advertisements - an increase of nearly 10 per cent (year-on-year). This helped, among other initiatives, in contracting losses by 37 per cent - to Rs 177 crore. Its revenue grew by 13 per cent to Rs 8,130 crore.
The growing competition in the food and beverage sectors has also influenced the company's strategy.
Last week, its rival Coca-Cola announced it was keen to make its mango juice drink Maaza into a $1-billion brand by 2023.
A combination of manufacturing, marketing and distribution would be used to double Maaza's sales in eight years. At present, it is the highest-selling mango drink brand in India, followed by Frooti, a product of Mumbai-based Parle Agro.
PepsiCo's own mango juice, Slice, became a part of Tropicana's portfolio last year. Tropicana is marketed as a healthy beverage and drives the company's non-carbonated portfolio.
"The idea is to help the master brands straddle the price-value pyramid," said Vipul Prakash, vice-president, beverages category, PepsiCo India. "If you have a Slice in one hand, the 100 per cent juice portfolio sits at the other end. Now, we are creating a range of juices with locally produced fruits under Tropicana."
The first one, called Tropicana Mosambi (sweet lemon), has just rolled out from PepsiCo's juice-manufacturing plant at Nanded in Maharashtra. There are plans to introduce more such juice variants in the coming months.
Similarly, in snacks, the company has launched a namkeen (salty) range under Kurkure, apart from its core extruded snacks. A few months ago, it also launched Lay's Maxx - a premium snacks range.
