The Hindu Business Line : `We always look for more share of throat'

"On different occasions you are going to have different need states, as we call them. And, my objective is to satisfy the most number of need states," says Punita Lal, PepsiCo India's Executive Director, Marketing.

IT'S a typically muggy Chennai afternoon. The Reliance Web World on Chennai's choking main artery, Anna Salai, Mount Road to most, is bustling with activity. There's a buzz as one of Tamil cinema's popular young actors, Surya, is to arrive shortly to launch a new promo for soft drink major Pepsi. This time Pepsi has decided to do things differently - through the Reliance Web World centres, it conducts a `virtual' press conference, Web-cast to the media in other cities of Tamil Nadu.

The `hi-tech' conference evidently goes down well with Punita Lal, PepsiCo India's Executive Director (Marketing). As she says, Pepsi would like to be associated with whatever the youth are in with and a Web-cast conference would definitely be seen as a cool thing to do. Getting more share of throat is her agenda, she emphasises, as she took time off after the conference for a quick chat with Catalyst. Excerpts from the interview:

How has this summer been for carbonated soft drinks?

It's been the first summer after the cola majors did away with the Rs 5 pricing strategy. I would say two changes have taken place in the industry. The first is that the Rs 5 strategy was abandoned and we went back to the existing price levels. You can't continue to be at a promotional kind of pricing throughout. Certainly, when the consumer gets a bit spoilt with the Rs 5 pricing, it's a bit of a change (for a higher price point).

However, the very positive thing has been that consumer spends are significantly up. So, if you do the total on the volume consumed and the amount they are paying and do the turnover calculations, they are healthily positive. So, of course, when you are at a promotional price, volumes will always be larger but we haven't seen the decline to the extent we would have imagined. What has happened is that the size of the pie has widened; what came into the net as a result of the Rs 5 pricing has, happily for us, stayed in the net.

So, you would say that retention has been fairly successful?

I would think that with the pie widened you may have a difference in the frequency of interaction but certainly, in terms of penetration, we have maintained. Some dropouts would have happened but those were sub-economic entries in the first place, so it is a much more realistic scenario now.

Pepsi has stated that in order to increase depth of in-home consumption it is looking at a packaging makeover. Has `in-home' happened to the extent you've envisaged?

As a trend should it be happening? It should. As macro-economic indicators move up the consumer does better. We are not pushing it enough from a business viewpoint. Clearly for me the big challenge in this industry from a marketing viewpoint is sustainability of the business by moving it from impulse to habit. When you are up and about you have to quench your thirst, and you won't quibble about the brand. But when you are in-home, you make a conscious choice, you have reached out and brought the brand in. Therefore, there is much more habit and much more loyalty that gets built in. So, we will start focussing more on it.

What have been the growth rates and market share gains over the summer for Pepsi?

We've seen significant growth rates; we don't give our numbers out, but taking the industry as a whole we think we've done better than others. Having a long summer has helped but it's also rained early in a lot of places; in the North the summer wasn't as long as we would have liked it to be ... we're schizophrenic in this world, when it's raining and others are happy, we aren't!

PepsiCo's President Indra Nooyi on her recent trip to India was talking about how in the US consumers were looking more at non-calorific foods; does Pepsi have that kind of an offering here?

We have a healthy portfolio already. Growth rates for juices are at least twice or thrice that of carbonated soft drinks, but on very small bases, so it's unfair to compare; it's not a level playing field. There's a huge opportunity there.

The way I see it for us, it is share of throat that we aim for; anything that slips down your throat should be mine. (Laughs) Whether it's soft drink or water or juice does not matter. If I can capture a larger share of throat then I am in business. Because as a consumer you don't want to have Pepsi morning, evening and night. Obviously, you want variety and choice and at different parts of the day. On different occasions you are going to have different need states, as we call them. And, my objective is to satisfy most number of need states. If one brand can do that, great, but if I need four brands to do that, so be it.

What about the foray into iced tea, how's that progressing? You've also stated earlier that you would like to get into green tea, herbal teas ... a greater variety.

The iced tea foray is through the Lipton brand. We've launched in 15 cities now. It's early days but there's a healthy response. We would look at special teas when the market is ready for it. But, yes, globally, that's the way the world is moving.

Today, India is increasingly catching up with trends globally; trends arrive at your doorstep much faster because of democratisation of media, so we have to be one step ahead of the game. That's really important. Three months into the launch is too early to say how it will pan out.

How do you ensure consumer loyalty for your brand in this fickle world, especially when alternatives to soft drinks are available?

I think what you are seeing today is a consumer who does not want more of the same. He's a variety-seeking consumer or what we call a flirtatious consumer. For me to get the consumer to stick on means I have to offer him something more exciting, and it could be packaging, it could be the product in a different form - I have to constantly tantalise the consumer, otherwise he will move to greener pastures. For example, in Seven Up, we've launched Seven Up Ice, a variant which, when you drink, has some special ingredients which leaves an intense feeling of cool. It's an interesting variant and consumers have responded positively. We also have a new offering called Blackberry Blast, a new Mirinda variant. So we constantly throw something out which can excite the consumer. It's really about engaging the consumer.

Packaging is always a longer time frame because you make significant investments, but not so in new flavours where we can have more fluidity. We call them in-out variants. If it clicks, fine. In any case, we don't intend to keep it for a longer period, unlike, say a Diet Pepsi, which is a permanent introduction. An in-out is to get the consumer interested for a short while, get him to consume a little more. That's the broad reason why you have such variants.

What's been the response on Gatorade? It's quite an expensive drink at the moment. When do you intend to manufacture locally and reduce price points?

It's early beginnings. It's also a product that we import and sell. But demand is picking up so we intend to start our own production. Currently, at Rs 45 a bottle, it is not accessible to everybody. So, it's now a process of incubation. You drop it in, seed the market, if it does not develop critical mass it's not worth our while to invest huge sums of money to produce it here and find out there are only two-and-a-half consumers for it. When is the tipping point, is it when we sell two lakh bottles or one million bottles. We will look into offering it at more attractive price points if we manufacture here.

Would you say the share of cola in the overall soft drink offering is on the decline?

In our jargon we define it as width and depth. Take the Rs 5 strategy - while overall depth has increased, it has got fragmented across brands. Earlier it was a very cola-oriented brand, but now we have a CSD-switching consumer who is quite comfortable switching between a cola or an orange. That overall depth may have increased but by brand may have decreased.

Now, you can see that it is not only the colas which are very salient, so is the orange category, and Seven Up too. Tamil Nadu is a manifestation of that; we have a strong Mirinda base here, a strong Seven Up and Pepsi base as well. Think of 10 years ago, we just advertised Pepsi and life was over! It's changed a long way since then.

You are still strongly following a celebrity-led strategy, given this new promotion too that you are doing with actor Surya ... ?

Well, you could loosely call it that, though we would like to call it a youth-led strategy because that's where the DNA of Pepsi as a brand lies. Tomorrow, if young people start liking skydiving, we will be there. For us, it's all about capturing the hearts and minds of people. Celebrities are role models.They aspire to becoming as famous as them. The difference, though, is that while a large number of brands do celebrity marketing,there aren't many brands where the equations between a celebrity and the brand are as equal as in Pepsi's case. We use celebrities in such a way that they don't overpower the brand; the brand brings equally to the party as opposed to advertising where you remember the celebrity and wonder which brand it was. Yes, we do movie marketing, cricket marketing and so on but we don't market the celebrity, we market the brand.

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