PepsiCo counters inflation with small packs, low cost items

With high inflation making consumers think twice before spending, food and beverages major PepsiCo is turning to measures like reducing pack sizes and introducing very low priced items in order to keep sales volume counter ticking in India.

Despite hiking prices, the company is confident that steps like launching products specifically for bottom of pyramid consumers as well as for the premium-end segment will help it strike a balance between volumes and value.

"PepsiCo has taken a set of measures to combat inflationary pressure both on cost site and consumers while looking to manage volume," PepsiCo India Sales Head Samudra Bhattacharya said at a Nielsen event here.

In the recent past the company has taken price increases both in beverages and food portfolio and at the same time downsized some of the packets, he added.

"The price increases that we take on our product and downsizing them have to be carefully managed so that volumes do not get impacted," he added.

The company has introduced a host of products at Rs 10 price point in the beverages category and launched 350 ml PET bottles at Rs 20 across India. It also introduced value packs like the 1.2 litre family pack for consumers seeking good bargains.

PepsiCo India has launched products such as TataGluco, Iron Chuski' and Kurkure masala balls priced at Rs 2-5 per pack of 10-12 grams each targeting the bottom of pyramid consumers as it targets the mass market.

"We are working continuously to launch more products targetted at the bottom of pyramid (BOP) consumers," Bhattacharya said, adding the focus has also been on distribution and availability of these products.

He, however, said while focusing on BOP and mass market, PepsiCo is also focusing on premium end products such as Lipton ice tea for value growth.

"In an inflationary environment, we have to ensure that revenues keep flowing. So we are equally focusing on premium products to drive value sales," he said.

By doing all these, PepsiCo in the last 2 years has seen CAGR of 20% in beverages segment and 25% in foods business, Bhattacharya added.

India has been reeling under high inflation this year and the headline inflation rose to 9.73% in October due to expensive food items and fuel, adding to hardships of common man.