 "D Shivakumar")
India's leading food & beverage maker PepsiCo on Tuesday signed a memorandum of understanding (MoU) with the Maharashtra government to promote citrus-fruit farming and manufacturing in the state. This follows Hindustan Coca-Cola Beverages and Jain Irrigation's orange-juice manufacturing MoU with the state government last week. D Shivakumar, chairman and chief executive of PepsiCo India, tells Viveat Susan Pinto there are more MoUs in the pipeline. Edited excerpts:
You have signed an MoU with the Maharashtra government. Are you looking at more such agreements, in keeping with the Make in India objective?
We are going in the direction that uses our core knowledge - material, material transformation, forging, machining, assembly, sub-systems. That's where our expertise lies. The MoU with the Maharashtra government is to promote citrus-fruit farming in the state, besides driving joint investment with our partners to help create best-in-class fruit processing here. We already have a citrus processing plant in the Nanded region of the state. The first product, called Tropicana Mosambi, has just rolled out from that plant and there will be more such products, tailored to local tastes with locally produced 'fruits of India'. The challenge clearly is to get more processable varieties of citrus fruit from the local farmers, which is what the agreement endeavours to do. By training and educating the local farmers, we hope to achieve that, something we did with potato farming in Punjab earlier. As far as more agreements go, yes, we are looking at signing more MoUs with other states. That will come in due course of time.
What is PepsiCo doing to respond to the challenge of regional brands in foods? Many of them are a force to reckon with in foods...
You can either have a strategy, which is purely local in nature. If you have that, you could end up with 30 brands in every single category, which is unviable. Or you could have a national brand with regional blends strategy. Typically, companies that are represented nationally, such as us, go with the national brand, regional blends or extensions strategy. Local or regional brands are not something we intend to have in our portfolio.
Indra Nooyi (PepsiCo's global chairperson & CEO) has given a clear mandate to all her teams across the world to focus on the health-for-you segment. How is PepsiCo India fulfilling this objective?
We are taking this very seriously. Our product Revive, which is an isotonic drink in the hydration category, has lower sugar levels in comparison to rivals.
We are pushing healthy beverages such as Lipton Ice Tea (in a joint venture with Hindustan Unilever) and Gatorade (sports drink) that give clear functional benefits.
Our joint venture with Tata Global Beverages is about nourishing the bottom-of-the-pyramid with healthy, affordable products. In juices, we have put a lot of emphasis on getting wholesome juices out under brands such as Tropicana. The entire Quaker portfolio is predicated on health. In the area of namkeens (snacks), we have developed two variants with low fat content. This is like a diet range and we have committed globally to reducing saturated fat, salt etc in our products. We are progressing quite well on that.
While cola still remains a large market in India, will health-for-you become a significant revenue generator for PepsiCo going forward?
Yes, it will. That is the plan put out by our chairperson globally and something which we are following. The cola market is still a significant chunk of the canteen stores department channel in India, so you can't wish it away. But, other categories are emerging, which will get bigger over time. If you have to mark your presence there, you need to start early.
Your competitor Coca-Cola as well as local players such as Manpasand have responded quickly to the Prime Minister's call to have juice with fizz. What is PepsiCo doing in this regard?
PepsiCo will leverage learnings from other markets in which it operates to identify a viable path to adding fruit juice to their existing carbonated drinks to bring significant volume to consumption. We propose to also create a cross-functional team within PepsiCo combining local and global resources and different expertise (led by strategy, including finance, manufacturing, sourcing, agronomy, supply chain and marketing experts) to drive implementation of this project. You should hear from us shortly on this.
