New Delhi, Jan 29: Pepsico is not interested in following its competitor Coca-Cola's strategy in the country of buying out its bottlers. Pepsico Inc's chairman and chief executive officer Roger Enrico told journalists here on Tuesday that the company's existing strategy of using franchisee bottlers was working fine and he saw no rationale in changing this. Roughly half of Pepsi's beverages in the country are bottled by franchisees.Pepsi got top quality beverages from all its bottlers, including the franchisees. "I see little sense in disturbing the system," Enrico said.
The 52-year-old CEO, who has played a major role in the growth of the $30 billion Fortune 500 company during the last 25 years, was here to announce the Pepsi bottler of the year award to Ravi Jaipuria, who owns Agra Beverages.
The Pepsi chief said while Coke's statement of trying to sell its beverage at Rs 5 a bottle was welcome, he didn't really think it was possible to sell soft-drinks at this price. "If they do it, we will not befound wanting. We have the financial resources, and will not hesitate to use them", he added.
Reacting to recent statements made by Samata Party leader George Fernandes that given an option he would repeat what he did to Coca-Cola in 1977, Enrico said he was not worried by such "colourful statements." The liberalisation process in the country, he felt, was irreversible. In any case, Pepsi is fully committed to India and employs over 35,000 persons. Since its entry in 1989, it has brought in over Rs 1000 crore in foreign exchange and plans to invest Rs 500 crore in over three years for its operations in India.
While Enrico criticised the high levels of excise and other duties levied on beverages, he was quick to deflect a statement by Pepsi India chief PM Sinha on the high retail margins in the country. While Sinha said the margins were three times those on other consumer goods, Enrico said they weren't out of line with those prevailing globally. Enrico said Pepsi, which has already invested Rs 1,000crore in India in the last eight years, plans to invest another Rs 500 crore, primarily in the beverages business -- investments in food processing would be over and above this. Pepsi has, however, still not made any profits so far as it is still amortising large investments made in the past. "The amounts, however, are in line with what we expected, and aren't really bothering us", Enrico said.
Pepsi officials also told newspersons that they expect their export turnover this year to be around $600 million (Rs 240 crore), upfrom Rs 200 crore last year.
Diet Pepsi launch by end of the yearThe much-awaited launch of Diet Pepsi in India will have to wait till the end of this year. The launch of the non-calorie Cola was earlier expected in mid-1998 but Pepsi is yet to get the necessary government approvals in this regard. Pepsico India chief PM Sinha said the approvals under the FPO laws usually take three years. "We have already completed a little over two years of the waiting period. Hopefully theapproval would come by the year-end".
Pepsi is keen on the launch of diet colas and is hopeful that in the first year of the launch, diet cola will grab 10 per cent of the soft drink market share in India. Internationally, 25 per cent of the soft drinks are diet colas. Sinha said Pepsi has already submitted a detailed report on the usage of the blend of artificial sweeteners, aspartame and acesulfame, to the government.
The blend has already been approved by the Central Committee of Food Standards. "Only the last hurdle remains to be crossed. I am hopeful that Indians won't have to wait till the 21st century to taste Diet Pepsi", he quipped.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
