In an interview with IANS, Vishal Kaul, Vice President & Business Head, Beverages, PepsiCo India, and Dilen Gandhi, Senior Director and Category Head of Foods, PepsiCo India, said that within 30 years of its establishment in India, PepsiCo India has grown exponentially to emerge as one of the largest F&B companies in the country.
On account of such a tremendous growth, PepsiCo India has committed to invest over $2.1 billion in the country over a five-year period ending in 2022.
“’As people adjust to the new normal’, in-home consumption is witnessing a significant uptake. We are witnessing a jump in both penetration and frequency of our food and beverage categories. There is a growing demand for our larger packs as in-home occasions of togetherness have increased manifold. While the consumers are looking at in-home experiences and seeking convenience, they are also looking at value,” they said.
“While there have been some short-term head winds due to COVID, we at PepsiCo are extremely optimistic about the future and are committed to provide consumers the right portfolio of products across food and beverages,” they said.
“Even in the COVID environment, our categories are seeing robust demand and growth across most channels,” they added.
How is PepsiCo India responding with its business models to the COVID-19 situation?
The COVID-19 has led to a complete paradigm shift as everything around us has changed- consumer behavior, retail landscape, competitive environment.
Very early on, we realized there was no playbook to tackle the COVID challenge and the situation would continue to change.
So, we had to arm ourselves with taking quick decisions while not having all the relevant information. To help us navigate the crisis, we established 6 guiding principles: Being People Centric, Being Consumer Centric, Being Customer Centric, Being Community Stewards, Being Agile and Being Prudent. These were the lens through which we saw every decision and we empowered our teams for agile decision making.
At a time when stepping out for even essentials was fraught with risks, making our product conveniently available for our retailers and consumers was a key focus area. Hyper-local delivery emerged as a solution and we invested in emergent channels like e-commerce for both B2C and B2B.
We partnered with Amazon, Big Basket, Grofers, Swiggy and Dunzo to ensure uninterrupted availability of our food and beverage products to consumers across locations with safe delivery-on demand for all our consumers.
For B2B, we further strengthened our existing Distributor model with the EB2B model, where we partnered with Udaan and Big Basket to help small and medium businesses. This partnership ensured our product portfolio was easily made available to retailers, so that they can cater to demand in the market.
How does PepsiCo view the big jump in consumption of snacks and beverages at home?
PepsiCo India has always kept a pulse on consumer trends and continued to develop its portfolio in line with what consumers want. As people adjust to the ‘new normal’, in-home consumption is witnessing a significant uptake.
We are witnessing a jump in both penetration and frequency of our food and beverage categories. There is a growing demand for our larger packs as in-home occasions of togetherness have increased manifold. While the consumers are looking at in home experiences and seeking convenience, they are also looking at value.
In order to serve the consumer better and rapidly adapt to their changing requirements we have introduced a 1.25-liter PET pack in our beverage portfolio at a very affordable price of Rs 50 which will enable the stay-at- home times even more special for our consumers. We have also introduced various combo packs for our food portfolio creating and further driving in-home consumption.
What are the investment plans for PepsiCo in India?
Within 30 years of our establishment in India, PepsiCo India has grown exponentially to emerge as the largest Food and Beverage company in the country.
On account of such a tremendous growth, PepsiCo India has committed to invest over $2.1 billion in the country over a five-year period ending in 2022.
This commitment is a part of our previously disclosed commitment to invest US$ 5.5 billion in India and includes our plan to double our manufacturing capabilities locally in the next five years, to cater to the ever-increasing demand of our products among the consumers.
In recent years, we have announced an investment of Rs 514 Crores in a new foods facility in Uttar Pradesh which will provide 1,500 direct/indirect jobs. We have also invested in increasing capacity at our existing foods plants in West Bengal and Maharashtra and have additionally proposed to set up a greenfield project in Assam.
What is the production capacity for the PepsiCo products, and has it reached pre-COVID levels?
We have resumed operations/ manufacturing across foods and beverages in the best manner possible, ensuring that all guidelines regarding safety of our employees are strictly adhered to. In the current environment and limited workforce across shifts, we are trying to ensure that we can meet the demand and operate at an optimal level to cater to our consumers with their favorite snacks and beverages.
Nonetheless, we remain committed towards our employees and our consumers and see an uptake in both supply and demand in both categories.
What has been the response to the COVID situation?
As brands look at engaging with consumers, the first and foremost part is that the current situation requires brands to provide consumers with a seamless and safe buying experience.
That apart, this is also a unique opportunity to build an even more authentic relationship with the consumers by listening to them and providing the functional and emotional comfort.
While there have been new ways of ensuring consumers had 24X7 accessibility of our products in a safe and hygienic manner, Brands across the PepsiCo India portfolio have also initiated interesting campaigns rooted into insights that we mined through the real time social listening we do at PepsiCo For consumers, safety comes first, and they are now refraining from going to crowded places and prefer low exposure.
Hence, we partnered with Swiggy and Dunzo to provide our products across food and beverages at their doorsteps, 24X7. We also saw that with low touch format being the new trend, there was a need to work with our partners to find low or no touch solutions for dispensing water. After extensive research and trials, we were able to finalize the Aquafina Low touch dispenser model as a product that we could roll out now given it meets key criteria including safety of consumer, practicality as well as economies of scale.
We also evolved in the way we communicated to our consumers with messaging that were more relevant in current times. For example, Pepsi identified that while social distancing was the new normal, however a lot of consumers were either not aware of it or were not following it fully. Salaam and Namaste, which were deeply rooted into Indian culture are actually the best forms of contactless greetings, which was the need of the hour during the COVID times.
In an endeavor to make these contactless Indian greetings a part of pop culture, Pepsi introduced a digital forward campaign that aimed at inspiring the world that greeting each other with salaam/namaste is a perfect way to ensure social distancing and yet maintain connections responsibly. It encouraged behavioral change through adherence to social distancing norms in an entertaining manner. The campaign broke all past records in India and made a meaningful impact to the consumers’ lives.
On the other hand, LAY’S, started a special initiative for the many unsung heroes of India – farmers, truck drivers, retailers, etc. e who continue to bring joy to millions even in these challenging times. The brand partnered with Smile Foundation to provide hygiene kits to over 40,000 families of such unsung heroes. These hygiene kits contain masks and sanitizers, to support these champions as they continue to work hard even in these unprecedented times.
As part of the initiative LAY’S has also collaborated with leading Indian brands like Airtel, ICICI Bank, Parachute, Dunzo, Big Basket, JK Type, Vistara, Grofers and together have thanked millions of these unsung heroes. We also had other brands from our portfolio like Mountain Dew, Quaker, Tropicana etc do similar contextual campaigns and the response from the consumers has been overwhelming.
What have been the sustainability initiatives of PepsiCo?
In its role as a responsible social citizen, PepsiCo India has taken several initiatives to contribute to the nation’s ongoing efforts to combat the COVID-19 outbreak. As part of its #GiveMealsGiveHope global programme, PepsiCo India provided over 10 million meals to the underprivileged and marginalized families impacted by the COVID-19 outbreak across India. The meals were distributed in partnership with Akshaya Patra Foundation, Smile Foundation & CII Foundation, across the country.
The company also extended support to the healthcare and diagnostic facilities by providing over 35,000 COVID-19 testing kits to government labs, supplementing their efforts to combat the pandemic. Furthermore, the COVID-19 crisis has impacted the restaurants and the workers significantly. It is forecasted that 4 out of 10 restaurants would shut down. Pepsi initiated a campaign #PepsiSaveOurResturants, an inclusive program where every time you order food and add a beverage to your order and it can be any beverage — Pepsi or any other beverage, Pepsi will give that many meals to the restaurant workers who have served us. Pepsi partnered with NRAI and Swiggy to bring this campaign to life. The campaign has got great response as it has provided many consumers an avenue to support the restaurant workers who have always served them.
What are the changing consumer patterns expected due to COVID?
The COVID-19 challenge is making both consumers and brands face a new reality. Consumer behavior and pattern is emerging and evolving at a fast pace. Some of the key insights that are emerging are as follows:
#Mobile is the new TV: Consumers, customers, employees and our ecosystem partners have leap frogged towards leveraging digital solutions and the mobile is at the epicenter of all this. Be it work from home, communication to consumers, taking orders from customers or Ecom, consumers are practically dependent on their mobiles.
They are consuming content online, buying online and even engaging with extended family and finds online. Therefore, it’s important to jump shift this capability and work with the ecosystem partners to strengthen this muscle.
#Value in Table Stakes: While value has always been important for consumers, going forward it would become even more crucial. The brands/companies who can re-engineer their business models to deliver this via an advantaged model, would succeed in the long term.
#Hope Trust and Fun: We believe consumers would be looking at 3 emotional benefits and brands that can provide the same authentically, would be the ones that consumers would choose
– The first is Hope. Hope is tied very closely to empathy. Brands need to be empathic and craft messages which are reassuring and relatable to consumers in these unprecedented times.
– The second is Trust. Now more than ever, consumers need to see brands walk the talk in everything they do e whether it is the core product promise or leading a cause to support communities.
-The third is Fun. Today, consumers are working twice as hard, donning multiple hats and with sources of entertainment and recreation limited, a brand that can that can present an opportunity for consumers to express themselves in a fun manner will be able to build deeper connects with the consumers The situation would continue to evolve and it is important we continuously have our ear to the ground and we keep sharpening the strategy basis consumer needs.
What are the initiatives to bolster the retail network by PepsiCo?
The pandemic has given rise to a ‘new-normal’ world and we at PepsiCo India have maintained a close look out on the evolving consumer behavior pattern to be better prepared for the future. We take cognizance of the fact that we need to cater to different audiences, be it consumers, partners, distributors through different channels.
For the consumers, demand for online deliveries has soared since the start of the stay-at-home order. Thereby, it was almost imperative for businesses to enhance their Direct to Customer (D2C) channels like Swiggy, Dunzo to ensure we have exclusive e-stores and a mechanism to cater to our consumers at their doorstep 24/7.
By tapping the ‘Daily Grocery’ on Dunzo’s app, customers can visit the LAY’S E-store and get these products delivered within an hour of ordering. The initiative has currently been launched as a pilot in Bengaluru and will eventually expand to 4 more cities across Mumbai, Gurugram, Delhi, and Jaipur.
For the beverage category, we have tied up with Swiggy stores where we ensure availability of our products to the consumer on demand and delivery within 2 hours.
On the other hand, Aquafina has tied up with a micro delivery platform OwO is for expanding reach into “At -home” consumption of packaged water. From a consumer perspective, our research has shown that consumers prefer dealing with apps such as OwO as they find it convenient.
For the retailers and wholesalers, an interesting emerging channel is the EB2B model, under which PepsiCo India has entered into deep partnership with Udaan and Big Basket to help small and medium businesses. They should always have access to our product portfolio to ensure that they always meet demand. On the other hand, we remain committed to the distributors and ensure that we grow them and grow with them.
How does PepsiCo view the recent agriculture reforms including the flexibility to farmers to sell their products?
Let’s talk briefly about our collaborative programme and how that is focused on working closely with the farmers and based on years of trust and relationship.
At PepsiCo India, we are guided by eWinning with Purpose’ – our fundamental belief that the success of the company is inextricably linked to the sustainability of the world around.
Agriculture is at the heart of PepsiCo India, and the companies relationship with farmers in India goes back 30 years. PepsiCo was the first company to introduce own researched processed grade varieties in India in late 90’s.
At present, PepsiCo is largest processed grade potato buyer in India. To fulfill its chip grade potato demand locally, PepsiCo developed largest collaborative farming for potato in India spread across 13 states working involving over 24,000 farmers.
The potatoes are then processed in 3 manufacturing plants which employ close to 2,000 direct and indirect employees. The retention rate of farmers being part of the collaborative farming program is as high as 98 per cent. All the potato used in Lay’s and Uncle Chipps is sourced from farmers in India e in fact, PepsiCo is the largest buyer of chip grade potato in the country today.
What are your views on the outlook for consumer sentiment? Is it an essential versus discretionary choice?
India consumption story has just started and according to industry reports, India will be the 3rd largest consumption market by 2025.
While there have been some short-term head winds due to COVID, we at PepsiCo are extremely optimistic about the future and are committed to provide consumers the right portfolio of products across food and beverages.
Even in the COVID environment, our categories are seeing robust demand and growth across most channels. Our robust and balanced portfolio across “Fun for You” products like Pepsi, Lays Dew, Kurkure or “Better For You” products like Lipton, Pepsi Black or “Good For You” products like Quaker, Tropicana and Gatorade are getting greater acceptance from consumers.