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| 'We are entering the third phase of our innovation-based growth' |
| Suvi Dogra / New Delhi Jun 05, 2009, 00:40 IST |
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 Following its success with Kurkure, a branded product to suit Indian tastes and needs, FritoLay, the food arm of PepsiCo in India, has launched a baked savoury cracker brand, Aliva. The company says this is a milestone in its portfolio transformation journey to provide consumers healthier choices. Fritolay India CEO and Pepsico President Gautham Mukkavilli spoke to Suvi Dogra on the snack food business. Edited excerpts:
The beverage division has decided to scale up the investment this year. Will the snack food division do the same?
We are pretty much on track with what our global CEO, Indra Nooyi, announced last year for both core and innovation products and Aliva is one such example. We are entering the high-seasonality part of the business now, as we approach the festive season. But we are now gearing up for it with the investments as announced earlier.
What is the roadmap for FritoLay?
We are entering the third phase of our innovation-based growth now. Phase one was with potato chips in the time period of 1996 to 1999. In the second phase, we focused on products that bridged the gap between western and traditional salty snacks, as with Kurkure. This year, we enter the third phase, where we are looking at bridging namkeens and biscuits, and with Aliva we have created a new category altogether.
What will be the key challenges this year?
Last year, cost management and inflation were the bigger challenges, as was downtrading. This year, however, that pressure is less but we need to continue to watch these aspects, along with sourcing opportunities. We will focus on innovation, distribution and execution. The business has witnessed double-digit value growth and we expect similar growth this year.
You seem to be rolling out new SKUs (stock keeping units) at new price points.What is the reason?
The core of our business is built around three price points — Rs 5, Rs 10 and Rs 20. We have other price points such as Rs 3 and the recently introduced Rs 25 for Lays. We activate the lower price points when we anticipate instances of downtrading or even for providing options down the value chain.This kind activation is needed to address the most pressing business opportunity and the Rs 25 pack has got off to a good start, especially in modern trade format.
Going forward, one has to understand how one can sharply dissect the business by channel, by shopper, by consumer, as activation models can take you only a small way. One needs to look beyond it and shape your pack and portfolio accordingly. In recent times, this has been a key focus for us in terms of getting the price, pack and portfolio right.
But why only one SKU for Aliva?
This is an initial move. We want to balance this and not over-complicate it for the frontline by capitalising every small opportunity versus capturing the big opportunity and doing a good job of executing it and once you have got it right, going after the peripheral opportunities. The Rs 12 point price is good and we have great hopes for the product.
Where is the product being manufactured, and have you tweaked your lines for it?
Aliva is being produced at our Pune factory. It involved getting new technology to get the right texture and flavour for the product. We will create around 60 jobs at the factory this year.
Don’t you feel that by creating so many Indian flavours there could be chances of cannibalising your own brands?
Flavours is definitely a growth opportunity, as products made to suit the local palate sit well with consumers. However, there is cannibalisation to a certain extent but there is also an incremental benefit of growing the business. We continue to assess the level of cannibalisation and alter our marketing strategy accordingly.
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