The Hindu Business Line : Pepsi to bet on `health' products

IN a bid to compensate for the anticipated slowdown in sales this summer in carbonated soft drinks (CSD), PepsiCo India is gearing up for the peak summer season by stepping up investments in "health" products and bulk water.

It is banking on brands such as Tropicana juices, Diet Pepsi, sports drink Gatorade and Aquafina to realise its growth target.

The company expects a 15-20 per cent sales growth this year and has increased its overall marketing budget by the same quantum, said the Chairman, Mr Rajeev Bakshi.

The company is one of the title sponsors for the upcoming India-Pakistan cricket series.

"We are looking at 15-20 per cent value growth (in CSD sales) in 2005 but volume growth may be lower than last year since we increased prices late into 2004 and the effect of price increase on volume growth will be felt only this summer.

I also do not think that per capita growth for the soft drink industry as a whole will improve this year, again because of the price hikes," he told newspersons here.

Abandoning the low-priced affordability strategy of previous two years, both Coca-Cola India and PepsiCo had begun increasing prices along pack sizes in 2004.

In January this year, both companies have taken up the price of larger, PET bottles to Rs 38 (1.5 litres) and Rs 43 (2 litres) while the 200 ml and 300 ml pack sizes have been priced at Rs 6 and Rs 8 respectively.

Mr Bakshi said that 2004 saw the "demise" of the five-rupee price point.

On expansion of the company's product portfolio, Mr Bakshi said the bulk water (20 litre jars) would be extended beyond Delhi and Hyderabad to more cities.

PepsiCo has also firmed up plans to launch Lipton Ice Tea in three cities to begin with.

Also, after evaluating consumer response to sports drink Gatorade, which was launched some months ago, the company has decided to begin manufacturing this product in India from the third quarter of 2005, Mr Bakshi said but declined to divulge further details.

And in line with its stress on the "health" platform, PepsiCo may also get into low-fat snacks. Worldwide, the company has several such low-fat snacks options and Mr Bakshi indicated that some of these could be brought to India.

Meanwhile, the company on Monday kicked off a new advertising campaign for 7UP, co-starring brand mascot Fido Dido with Bollywood star Yana Gupta.

The new, 30-second advertisement has been produced by Farah Khan and created by ad agency J. Walter Thomson.

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