The Hindu Business Line : Pepsi exploring to enter `white' beverages

TAKING forward its increased thrust on the health platform, food and beverages major PepsiCo is toying with the idea of entering the milk and/or soya-based beverage category.

"We are investigating entering the white drinks category which could be milk or even soya based. It would definitely be a value-added product where we could create a niche for ourselves," Mr Rajeev Bakshi, Chairman, PepsiCo India, said.

Incidentally, products revolving around the "health" platform have emerged as the growth driver for the company this year. According to Mr Bakshi, among the company's product portfolio, Diet Pepsi saw the largest growth in 2005 followed by juices and water. "The carbonated business has also done well this year, and we have seen a double-digit growth in value sales, despite the fact that we increased prices of our soft drinks by about 18 per cent this year due to cost pressures," he said. Meanwhile, health drink Gatorade, which PepsiCo launched this year, has also been able to generate volumes. "By the end of this year, sales of Gatorade will be about 20 per cent of that of Tropicana (in value terms) and it is growing. We would be rolling out newer flavours of Gatorade over the next few months," said Mr Bakshi, who is bullish on the premium category and feels that this segment could well be the growth trigger for the FMCG sector, which has instead been concentrating on the mass market.

The company is diversifying into newer businesses in the agriculture domain as well. Even as PepsiCo has identified seaweeds as a key driver for exports and its Florida oranges project in Punjab is running on track, the company is now looking at producing organic fertilisers in India. "We would be producing organic fertilisers, which would increase yields of cash crops by 20 per cent. A completely new technology is being utilised for this project," he said, declining to divulge any further details.

For the Florida Oranges project, the company along with Government of Punjab is in the process of setting up two plants in the State for processing fruits. The plants would be run by Pepsi which would also then be selling the intermediate product (concentrate/juice) to other firms, in India or abroad. Currently, around 4 million saplings (of Florida oranges) have been planted in Punjab in tie-up with the Punjab Government. Though there would be a gestation period of about 6-7 years before the project bears fruit, it would allow the country to compete at the global level in the juices category. Currently, Brazil and the US are the major producers for juice.