PepsiCo to tap health, energy drinks market

PepsiCo to tap health, energy drinks market

Mumbai: PepsiCo India Holdings Pvt. Ltd is set to launch an energy drink from the global Pepsi portfolio and another drink with a local flavour in an attempt to tap into a small but growing market for health drinks among young people.

Globally, health and wellness are part of PepsiCo Inc. chairman Indra Nooyi’s new agenda for the company.

Mountain Dew AMP and SoBe are the two energy drink brands available in Pepsi’s global portfolio and compete with market leader Red Bull (from Red Bull GmbH) in a fast-growing market for non-carbonated drinks in the US.

“Pepsi will be launching the energy drink only at the modern retail outlets as it is a niche and premium segment and will compete directly with Red Bull," said a senior executive working on the marketing plan for the launch. While Red Bull is sold for Rs75 for a 250ml can, Pepsi’s new product will be priced lower than that, this executive, who did not wish to identified, added. “Right now, we will be focusing on creating a market for energy drinks in India and our brand will be priced lower than our competitor’s (Red Bull)."

PepsiCo India will also get aggressive in the “Indianized" drinks segment with nimbu-paani (fresh lime) which will directly compete with Coca Cola’s aam panna (juice made from unripe mangoes). With these launches, the company will compete with its arch-rival Coca-Cola India in the non-carbonated drinks space as well. Last year, Coca-Cola had said it is evaluating getting into categories such as energy drinks, sports drinks and juices. In 2007, Coca-Cola acquired US vitamin water maker Energy Brands Inc. for $4.1 billion (Rs17,138 crore) to boost its lagging position in the race to dominate the fast-growing market for non-carbonated drinks.

According to market research firm Datamonitor Plc., the energy drinks market in India is estimated at Rs499.2 crore and is still at a nascent stage when compared with carbonated drinks, which is valued at Rs6,027.9 crore. However, the energy drinks market in India grew at 50% a year between 2002 and 2007. In contrast, growth of carbonated drinks in India slowed to 0.5% during the same period. On the back of an increasing number of modern retail stores, the energy drinks market is expected to reach Rs1,100 crore by 2010.

“At present, Red Bull holds the advantage in this two-horse race as it already has the mass appeal and is very popular among the youth. Appropriate brand positioning in combination with effective advertising can help new entrants (such as Pepsi) in gaining share of the energy drink market," said Kaustav Ray, an analyst at Datamonitor.