Frito-Lay Lines Up Food Unit In Pune

Frito-Lay India (earlier Pepsi Foods) is setting up a new manufacturing facility for snack foods near Pune, Maharashtra, with a capacity of more than 2,400 tonnes per annum. The new facility is coming up on an old plant site of Dukes Bottling Co, which Pepisco bought over a few years ago. As a result the basic land development and construction is already in place. The cost of the new plant, therefore, would be around Rs 7 crore to Rs 8 crore only.

The Pune factory, expected to go on stream only by the first quarter of 1998, would be Pepsis second unit in the country. The company already has a plus 2,000-tpa unit at Channo, Punjab.

The new unit is primarily for the production of Frito-Lays range of potato chips. It may later manufacture the other western snacks range including the extruded product brands like Cheetos.

According to industry sources, the Pune facility is expected to reduce Frito-Lays freight bill for its food items as it will be able to service the western and southern markets more easily.

Freight cost is a major cost input due to the type of packaging used to prevent breakage. On a rough estimate the freight bill involved in servicing Maharastra and Gujarat would come down by nearly 70 per cent while the south could see freight costs dropping by 50 per cent, the sources said.

Frito-Lay has been aggressively pushing its snacks foods business once it ironed out the distribution problems. Industry sources peg the company marketshare in the chips segment at above 40 per cent with its arch competitor being Uncle Chipps. The company is now working on gaining leadership in branded chips which currently has a market worth over 4,000 tpa.

Once the new facility goes onstream, Frito-Lay India also plans to introduce new flavours and products in keeping with its international marketing initiatives.

The company has already repositioned and relaunched its chips with a new brandname, Frito-Lay Ruffles, while fresh incentives are being built in to expand the market for its Cheetos brand of extruded products like corn puffs.

It is also planning to expand its Indian snacks business--including the Lehar range of bhujiyaas--and has plans to enter the confectionery business.