Pepsi to reduce sugar content, focus on making nutrition products in India
PepsiCo already has two strong brands in India that sell nutrition-based products—fruit-based beverages under Tropicana brand and oats under Quaker
- Q2 results: HDFC Bank net profit rises 20.6% to Rs 5006 crore
- Govt, board eye asset sales to turn IL&FS around in six months
- Jet Airways sets jet sale, leaseback plan in motion to raise $800 mn
- Lenders accept ArcelorMittal resolution plan for Essar Steel
- #MeToo: Publicis India sacks executive creative director Ishrath Nawaz
New Delhi: PepsiCo India Holdings Pvt. Ltd, the local arm of American food and beverages company PepsiCo Inc., will intensify its focus on health and nutrition, reduce sugar content in its beverages including carbonated drinks and ensure sustainable growth in India like it has been doing in the West.
“The company is embarking on nutrition,” said D. Shivakumar, chairman and chief executive of PepsiCo India.
“There’s demand for food that is healthy and nutritious. And, it’s a consumer-driven demand backed by changing lifestyle, double-income families, single households and more women joining the workforce. Consumers are willing to buy packaged food as long they get healthy and nutritious products,” he added.
PepsiCo already has two strong brands in India that sell nutritious food products. It has been selling fruit-based beverages under the Tropicana brand and oats under Quaker. Plus, it sells hydration drink Revive under the 7Up brand and other functional beverages through NourishCo, a joint venture with Tata Global Beverages.
Going forward, said Shivakumar, PepsiCo will launch more healthy and nutritious products which are developed locally under the flagship brands of Tropicana and Quaker. He declined to elaborate on how many products the company would launch this year. The company has no immediate plan to bring products from its global portfolio.
Globally, PepsiCo has a host of ‘Good-for-You’ and ‘Better-for-You’ brands that it has built over the years as part of its plan to become a health and nutrition products maker.
In the past few years, PepsiCo’s focus shifted from its ‘Fun-for-You’ products, such as carbonated beverages and snacks, and its global chairman and CEO Indra Nooyi is currently steering the company towards a purpose-driven future. It wants to make products healthier, empower employees and encourage environmental responsibility. Health and nutrition as a category accounted for more than 25% of PepsiCo’s revenue in 2015.
“We are doing every bit of it in India,” Shivakumar added.
Consumers on the e-commerce channel, he said, have a higher demand for nutrition products compared to the mainstream. PepsiCo sells products through 5-6 online marketplaces including Amazon and BigBasket.
PepsiCo’s Tropicana, according to market research firm Euromonitor International, had a 8.9% value share of the fruit juice market in 2015, down from 10% in 2010. It competes with Dabur India Ltd’s Real that had a 13.6% share.
Quaker, on the other hand, is a smaller brand in India while PepsiCo has been trying to push the brand with more localized products like poha and upma. Quaker had a 13.3% share (value) of the packaged breakfast market in India in 2015, up from 9.5% in 2010, according to Eurominitor. The breakfast market in India is led by Kellogg Co. (36.8% market share in 2015) and Bagrry’s India (17.9%).
“Juice is a fast growing category. Oats is a very nascent market, but people are picking up oats and the category is growing. PepsiCo is doing a lot of local innovations to enhance the breakfast offering,” said Shivakumar. Besides launching products suited for the Indian palate, it has introduced ‘one meal’ packs for Rs 10 to increase penetration.
It has already started work on using less sugar in beverages in sync with its aim to reduce sugar content in certain drinks by 25% by 2020.
In India, it has been test-marketing 7Up made with stevia sweetener.
PepsiCo will also add products in water, sports drinks and functional beverage categories. “Water is an important market and a significant business for us. Almost 50% of the liquid refreshment market in India is water,” added Shivakumar. PepsiCo sells water under the Aquafina brand in India.
PepsiCo is not alone. Almost every packaged food and beverages company, both multinational and home-grown, has been increasing focus on health and nutrition.
Swiss packaged food company Nestle India Ltd chaiman and managing director Suresh Narayanan, in a recent interview to Mint, said Nestle will focus on health and nutrition as a category for faster growth.
Danone SA has also decided to shift focus to its nutrition business to double its revenue in India by 2020, Rodrigo Lima, managing director, Danone India Pvt. Ltd, the local unit of the French dairy company, said on 17 January.
Home-grown ITC Ltd chairman Y.C. Deveshwar, in his speech at the company’s 105th annual general meeting on 22 July 2016, said that the cigarette-to-fruit juice company will focus on nutrition, health and well-being for the packaged consumer goods business.
Nutrition, fortified food and beverages are growing very fast in India, said Rajat Wahi, partner and head (consumer markets), at consulting firm KPMG in India. “Every company, essentially the multinationals who have such products in their global portfolio, are looking at this segment which is projected to reach $6 billion in the next few years from $2.1 billion at present,” he added.
Editor's Picks »
- India to put former top climate change official Rajendra Pachauri on trial for sexual harassment
- Rahul Gandhi hits out at KCR, claims Telangana reeling under debt
- Deve Gowda-Siddaramaiah display rare bonhomie ahead of Karnataka by-polls
- Govt allocates Rs 144 crore to AYUSH ministry for alternative medicines
- Esperanto, A language whose time never came
- Policy rethink and higher volumes to aid container shippers
- DCB Bank delivers a strong Q2 but pressure on margins foreseen
- Havells India: Rising costs give a jolt to profitability in September quarter
- All’s well at Mindtree, except for high client concentration risk
- India’s rising steel demand is making companies starry-eyed