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Food & beverage major PepsiCo has left no stone unturned to give a solid start to its second cola, the Pepsi Atom, a product that it quietly developed in the last few years. But it is not its first. Its Max, a sugarless cola that was targeted at the health-conscious was launched and withdrawn in 2010 when it failed to find takers.
Three years on, the maker of Lay's wafers and Kurkure snacks besides the flagship beverage, Pepsi, has been careful to avoid the pitfalls of the past.
Reported to have spent Rs 150 crore in its title sponsorship of the Indian Premier League, 2013, PepsiCo capitalised on even the off-field opportunities for visibility, such as cheerleaders caught drinking from Atom bottles when not dancing to celebrate their team's performance.
The IPL 2013, of which PepsiCo was the title, beverage and on-air sponsor, provided the right platform for the launch, says Homi Battiwalla, senior director, marketing, colas, juices & hydration, PepsiCo India. "The launch was in line with the company's commitment to the Indian consumer who now has a choice between the universal taste of Pepsi and the unique, bold experience of Pepsi Atom," he adds.
The TVC made the Atom's positioning clear. The actor Sushant Singh Rajput, of Kai Po Che-fame, guzzled down the contents of the newest cola in town, predictably sending the pulse rate of his female fans soaring.
In an unmistakable challenge to the current 'macho' cola, Thums Up from Coca-Cola, PepsiCo termed the Atom as the "Josh Cola", looking to spice up its concoction to tap the market that makes Thums Up the leading carbonated beverage brand in the country.
While Battiwalla declines to give specific sales numbers, persons in the know say that the brand has seen repeat purchase in the returnable glass bottle (RGB) format. It sells in three packs - a can, PET pack and an RGB. The sale trend is in line with the category PepsiCo is looking to crack with the Atom. "Typically a strong cola tends to do well in the RGB format," says Harish Bijoor, chief executive officer, Harish Bijoor Consults. "The reason for this is the macho perception of the product in addition to its strong taste. These attributes tend to lend themselves well to on-premise consumption (that is, consumption at stores, canteens and hotels). In carbonated drinks, the glass bottle is all about on-premise consumption, where you can quickly have your drink and move on," he adds.
Though, Thums Up, claim Coca-Cola executives, has been an exception to the rule, doing well both as an on-premise and a take-home beverage. For instance, in modern trade, it is not uncommon to see huge PET packs of Thums Up being picked by shoppers for consumption at home.
PepsiCo had launched Atom across markets this summer in cans and PET packs, barring the state of Tamil Nadu. The RGBs, in contrast, were launched in select markets such as Mumbai, Pune, Goa, West Bengal and Uttar Pradesh. Company executives admit the selective marketing was owing to the expensive production of RGBs in comparison with PET packs. "If setting up a 600-bottles-per-minute line costs Rs 120 crore in PET, for glass bottles of the same number, the total cost would work out to Rs 90-100 crore. But year-on-year capital expenditure is high in glass bottles, which makes it an expensive proposition in comparison with PET bottles," says Vimal Kedia, managing director of Bangalore-based Manjushree Technopack, a PET packaging major.
Trade sources say PepsiCo will have to up its game significantly if it has to take on Thums Up.
Consumer feedback on popular Twitter handles has already dwelled unfavourably on Atom's unusual taste. But the company is in no mood to give up. Some attribute the repeat purchase of Atom's RGBs to its pricing, the same as that of its rival Thums Up, at Rs 10 for a 200-ml bottle. Atom's PET 500-ml pack is for Rs 25 and a 250-ml can for Rs 15.
Why a second cola?
Like Coca-Cola, PepsiCo has been looking to beef up its carbonated beverage portfolio. The segment of dark colas is where it did not have any other option until now. Between its Thums Up (15 per cent), Sprite (14.5 per cent) and Coke (8.5 per cent), Coca-Cola dominates the top-four list of fizzy drinks. Pepsi comes in at number three (12-13 per cent).
The growth of the carbonated beverage market in the country vis-a-vis markets in the west has spurred on the players.
With the exception of the April-June quarter this year, which was weak on account of the late arrival of the summer (the heat picked up towards the end of April) and the early onset of the monsoon (in June), the industry year-on-year has been growing at double digits. In the calendar year of 2012, the Rs 13,000-crore soft-drink market grew 17 per cent. PepsiCo could then consider a second cola here, unlike abroad where the fight in the dark cola segment is a straight one between Pepsi and Coke.
Battiwala says, "The initial response to the brand has been good and the product is doing well in our focus markets." But if PepsiCo looks to increase the footprint of glass bottles for the Atom, costs are also likely to increase.
