Every Indian Every Day!

Can YOU help PepsiCo India realize this vision?

Manu Anand (President, India Region) is a happy man. PepsiCo in India is the largest F&B company, with consistent high double digit growths across the portfolio. A frequent award winner for business achievements, socially responsible corporate, best employer etc, he has every reason to be feeling satisfied.

However, success never rests on its laurels, and yeh dil always maange more! One of Manus challenges is that even while PepsiCo growth is so healthy, it is largely from the middle of Indias affluence pyramid. To truly realize the immense potential of the India opportunity, PepsiCo must touch every Indians life every day!
Inviting Indias brightest young minds to help Manu draw up exciting plans that will make Indra even more proud of the India regions performance

Q: How can PepsiCo grow profitably across

Indias affluence pyramid?
Case structure: 1. About PepsiCo 2. PepsiCo India and our Vision 3. The India Business some fundamentals 4. Our Business Problem 5. Some Insights that can help you unlock the problem 6. What we need from you 7. How we will evaluate

Q: How can PepsiCo grow profitably across

Indias affluence pyramid?
Case structure: 1. About PepsiCo 2 PepsiCo India and our Vision 3. The India Business some fundamentals 4. Our Business Problem 5. Some Insights. that can help you unlock the problem 6. What we need from you 7. How we will evaluate

PepsiCo: Great Performance, Great Values!

World No.3 in FMCG
Ranked 1st in 2011 Dow Jones Sustainability World Index F&B sector
$26 mm contribution to foundation causes

Revenues $65 bn

Presence in 200 countries with over 500 brands

Water Global AwardsEnvironmental Company of the Year

World No.2 in F&B

22 brands > $1 bn sales each

3rd in CR Magazine- 100 Best Corporate Citizens

285,000 employees

Q: How can PepsiCo grow profitably across

Indias affluence pyramid?
Case structure: 1. About PepsiCo 2. PepsiCo India and our Vision 3. The India Business some fundamentals 4. Our Business Problem 5. Some Insights that can help you unlock the problem 6. What we need from you 7. How we will evaluate

A brave and ambitious vision for PepsiCo India

Nourishing & Delighting Every Indian Every Day
Most Loved Brands
> Local connect & relevance > Offer great value

Most Innovative Products

> Highly differentiated > Healthy and delicious

Most Powerful GTM System

> Most accessible products > Most affordable & visible

Most Loved Company

> Our Consumers > Our Environment

PepsiCo India: An Exciting Journey

2012 2011

2010

2009

VOLUME

2006 2000 1999 1996 1995 1998 2002

2008

1993

TIME

PepsiCo India: Performance with Purpose!

CII National Award Water Management

Golden Peacock Award Water Conservation

AMCHAM Innovative CSR Award Kolkata Plant

Social Governance Award Waste to Wealth

Water Digest Award For Water Practices

PepsiCo Award Environmental Sustainability

Q: How can PepsiCo grow profitably across

Indias affluence pyramid?
Case structure: 1. About PepsiCo 2. PepsiCo India and our Vision 3. The India Business some fundamentals 4. Our Business Problem 5. Some Insights that can help you unlock the problem 6. What we need from you 7. How we will evaluate

Success driven by cohesive strategy across business components

1. A wide range of ready to drink beverages (LRB) and salty snacks
LRB: Carbonated soft drinks (CSDs), Juice drinks, water, sports drinks, ice tea Foods: Potato chips (PC), Extruded snacks, Baked crackers and Oats

2.
3.

Wide manufacturing footprint helps delivery at optimum cost

Lovemark Brands
Lays, Pepsi, Kurkure, Mt Dew, Slice, Tropicana, Quaker... Own retail store space (racks and coolers) for all our categories Nimbooz, Aliva, Gatorade, Lipton Ice Tea Top FMCG recruiter at campus, Awarded Great Place to Work consistently

3 plants, 14 bottling units spread across regions, regionally empowered MUs

4.
5.

Robust S&D Model

Innovation Ahead of the Curve

6.

Talent Magnet

The Beverages portfolio

Carbonated Soft Drinks (CSD) Pepsi/7Up/Mirinda/ Mountain Dew Evervess Soda
200ml glass Rs.10, 300ml glass Rs.12 250ml can Rs.20, 330ml can Rs.22 600ml PET Rs.27, 1ltr PET Rs.38 2ltr PET Rs.59, 2.25ltr PET Rs.65 300ml glass Rs.7, 600ml PET Rs.14 200ml glass Rs.10, 250ml glass Rs.12 200ml tetra Rs.12, 500ml PET Rs.28 1.2ltr PET Rs.55, 1.8ltr PET Rs.80 200ml glass Rs.10, 350ml PET Rs.18, 500ml PET Rs.25 500ml PET Rs.10, 1ltr PET Rs.16, 2ltr PET Rs.25 100% : 200ml tetra Rs.22, 1ltr tetra Rs.99 Rest of Range: 200ml tetra Rs.20, 1lt Rs.85 Powder Rs.15, 500ml PET Rs.35

Core Products

Juice Based Drinks (JBD)

Slice
Nimbooz

Water
Juices Sports Drinks

Aquafina Tropicana Gatorade Lipton Ice Tea Himalayan TATA Gluco+ TATA Water+

Premium Products
Ice tea Water

350ml PET Rs.29 200ml PET Rs.12, 500ml PET Rs.20, 750ml PET Rs.30, 1ltr PET Rs.40 200ml cup Rs.7

Value Products

200ml pouch Rs.3, 750ml PET Rs.8

The Foods portfolio

Lays Potato Chips Lays Baked Uncle Chipps
13g Rs.5, 26g Rs.10, 58g Rs.20
30g Rs.15, 67g Rs.30

13g Rs.5, 26g Rs.10, 58g Rs.20 9g Rs.2, 12g Rs.3, 24.7g Rs.5 51.8g Rs.10, 115g Rs.20 Solid Masti:20g Rs.5, 45g Rs.10

Salty

Bridge

Kurkure

Extruded

Cheetos Kurkure Extruded

(Monster Paws/ Puff Corn)

16.3g Rs.5, 32.4g Rs.10

18g Rs.5,

38g Rs.10

Traditional

Lehar

8g Rs.2, 20g Rs.5, 45g Rs.10 52g Rs.15, 170g Rs.30, 360g Rs.60, 1kg Rs.193

Cracker Oats

Aliva

60g Rs.15

Quaker

200g Rs.34, 500g Refill Rs.99 1000g Refill Rs.129, 1000g Jar Rs.159 Flavor Oats 27g Rs.10

Both categories extremely large, growing fast!

LRB Industry
25% 10% 17% Growths

Salty Snacks Industry (Volume)

52%
Extruded & Bridge 25%

Growths

31%

Traditional 50%
Potato chips 25% 26% 24%

-28%

21%

26%

Indian LRB industry is approx Rs. 48,000/- cr PepsiCo and Coca Cola are the dominant players, Parle the third major player, followed by Dabur.

Salty snacks is an approximately Rs.10,000cr industry PepsiCo by far the lead player Other national players ITC, Parle, Yellow Diamond Significant regional players, Haldiram, Balaji & Bikaji

* The percentages in white boxes denote the respective growth%

With massive headroom for category growth!

Per Capita LRB Consumption
China: 175 (in 2010)

Per Capita Salty Snacks Consumption

Kg. per capita
0.45 0.35 0.2 2009 2013 2015 2020 0.80

209 99

70

32
2009 2013 2015 2020

Packaged as % of total volume

1.5% 10%

Branded as % of total volume

4% 8%

2010

2020

2010

2020

A vast & structured Make-Sell-Deliver footprint

Jammu Company owned bottling plants Channo Phillaur Panipat Bhiwadi Channo Chaupanki Delhi Jodhpur Kosi

Beverages
Plant

Foods
Plant

Franchise owned bottling plants Faridabad

Bazpur Sonepat Foods plants Guwahati Guwahati

Noida

Jainpur
Sataria

Patna

Distributor

DC

Bharuch Rajkot

Bhopal Gwalior

Kanpur Jharkhand Kolkata Cuttak

Kolkata

Wholesaler

Urban spoke

Distributor

Wholesaler

Mahul Dukes

Nagpur Roha Pune Aurangabad Kolhapur Pune Hyderabad Guntur Dharwad Hyderabad Bangalore Bangalore

Vizag

Retailer

Retailer Hub Rural spoke Retailer

Retailer

Retailer

Goa

Palakkad

Hosur Chennai Erode Pondicherry co-packer Trichy co-packer Madurai

Retailer

Building Brand Love a critical priority

To gain consumer love for our brands, and maximize our investments in brand building, we ensure that:

Each brand has a distinct role in the portfolio, so that even as we provide choice in a repertoire category, we minimize cannibalization. Every brand answers to a clear consumer need, has a distinct cultural and sensorial language, and above all, connects with consumers at a deep emotional level.

Building Brand Love a critical priority

Youth Aspiration

Family: Modern Twist on Tradition

Women & family guilt free indulgence

Older Adults

International Flavors, Irresistible Taste

Kitchen Logic Ingredients

Enjoyable Grains

Super Grain for Nourishment and Health

Energy for today, Heart Healthy for Life

Building Brand Love a critical priority

Indian Adults/ Family Snacking

(Younger) Adults, middle class

Tweens

Traditional Indian Namkeens

Hunger Filling, Satisfaction

Light & Fun Shapes & Flavours

Joy of Sharing

Bole Mere Lips... I Love Uncle Chipps

Cheesy Mischievous Fun

Building Brand Love a critical priority

Youth: Youthful Irreverence

Youth: Impulsive Uninhibited Fun

Young Adults: Mood Uplifting

Young Men: Courage liquid

Electric Taste of Cola

Bold Orange Taste

Lemon Refreshment

Mind & Body Boost

Building Brand Love a critical priority

Youth/Young Adults: Sensorial Pleasure

Metros, Adults: Breakfast Nutrition

All Adults

Sports & Active Fans

Mango Indulgence

Quality, Purity, Taste 9 Fruit Nutrients

Rehydration, Sports Achievement

Make Breakfast 100%

The Purest Part of You

Is it in you?

S&D: Massive, yet nimble & cost-effective

To deliver our range of food & beverage products within arms reach, our GTM is designed to:

Reach all corners of the country Go deep within each state, to reach rural consumers Ensure all our skus are available and visible (jo dikhta hai woh bikta hai) Be agile & nimble to deal with marketplace dynamics Service all kinds of retailers and channels Cost-efficient structures, smooth processes a must!

Indias Retail environment is highly heterogeneous

Traditional Grocers dominate trade today; Modern Trade growing rapidly

FMCG Channels Value Contribution To FMCG % (Approximate)

Growth % 2011 /2010

# Stores ('000) , 2011

Top 5 Growth Driving Categories in the highest the Highest Growing Channels
Chemists

Grocer

58 14 9 6 4 5

13 22 26 23 30
32

3561

Diapers, Biscuits , Hair oils:, Condoms, Rubefacient

General Stores
Chemist Pan Plus Food Store Modern Trade

761
Food Stores

252 1139 162

Breakfast cereals, Milk food/ baby food, SDC, cordials and squashes, Vermicelli and noodles, cooking medium

~ 4000

MT Diapers , Baby oil/ Olive oil, Confectionary , Hair dyes , Scourers/ pads

Present across all types of retail outlets

A strong competitive advantage on ground

Over 1 mm chillers and racks in the country own retail shelf space

Chilling/Rack Infra Capable Partners

Technology

Segmented GTM design

SAMNA to support - Backend/ Frontend Real time tracking of inventory and to facilitate auto replenishments

Setup of right partners - Scale Distributors - Distributor consolidation Standardized distributor management processes

Capable Partners Organization & Processes

Organization and Processes

Span expansion Strong secondary focus Formally defined processes

GTM Approach Looks At 3 Dimensions of Segmentation

Product Categories Customer Segments Geography / Town Classes MT A Core B Value C / Non LRB Modern Organized trade, Hyper, Super, Dailies, Trade (MT) Stand-alone Modern Trade A B Volume per outlet Volume per outlet 800+ Cases Per Annum 250+ Cases Per Annum Rural Rest Of Urban (RoU) Metro 5L+

Premium

Metro / 5L+ ROU Rural

>0.5MM pop >0.1MM pop

<0.1MM pop 27

Volume per outlet < 250 Cases Per Annum

Segmented GTM has further strengthened our distribution muscle

Product Categories

Customer Segments

Geographies / Town Classes Metro, RoU All Geographies/Town Classes

Premium Core

MT,A MT, A, B, C

Value

B (lower end), C/Non LRB

Metro, RoU, Rural

Guide to different business drivers

BEVERAGES Profitability Drivers
CSD, Mango drink, Juices, Water
Mirinda, Mt Dew, 7 Up, Pepsi,

Revenue Drivers
CSD, Juices, Water
Pepsi, Mirinda, Mt Dew, 7Up,

Volume Drivers
Water, CSD, Juices
Aquafina

FOODS

Profitability Drivers PC, Kurkure, Extruded Lays, Kurkure

Revenue Drivers PC, Kurkure,

Volume Drivers PC, Kurkure, Namkeens, Oats Lays, Kurkure, Lehar, Quaker

Category

Category

Brand

Brand

Pack

Lays, Kurkure, Aliva

SSPet, Glass,

SS PET, Glass, MS PET

UP, Tamil Nadu, Haryana, Punjab, Karnataka Traditional Trade

MSPet,

Pack
UP, Tamil Nadu, Punjab, Haryana, Karnataka

Mid, Large

Geography

Karnataka. Tamil Nadu, Uttar Pradesh

Smalls, Mid, Large

North, East

Smalls, Large
North, East, South, West Traditional Trade

Geography

North, East

Channel

Traditional Trade

Traditional Trade

Channel

Traditional Trade

Traditional Trade

Q: How can PepsiCo grow profitably across

Indias affluence pyramid?
Case structure: 1. About PepsiCo 2. PepsiCo India and our Vision 3. The India Business some fundamentals 4. Our Business Problem 5. Some Insights that can help you unlock the problem 6. What we need from you 7. How we will evaluate

India is many Indias!

Indias Affluence pyramid is bottom heavy

Individualistic, Evolved, Westernized

13 mm SEC A1

Affluents (1%) Aspirers (17%) Climbers (16%) Strugglers (66%)

Striver Mindset, Big ambitions, Modernity with Tradition Actively seek new experiences Present-focused, Traditional, Small indulgences

200 mm SEC A2/B/C/R1

195mm SEC D/R2

790mm SEC E/R3/R4

Please see appendix for a copy of the Socio-economic classification (SEC) grid

Hard working, Compromising Uncertain income, Rare small treats

..who nonetheless have an increasing desire to participate in a new world reality

See video on how these consumer groups are different Video Name- Affluence Groups

Current PepsiCo revenues mostly from Aspirers,

early initiatives in red
Scale brands (CSDs, Slice, Aquafina, Lays, Kurkure, Cheetos) predominantly talk to Aspirers. Those that target Affluents are relatively small and not yet very profitable New initiatives to talk to the bottom ends have been launched recently, but not yet breakeven. Our Challenge is to grow at both ends of the pyramid a profit & accessibility challenge at the bottom end, and a volume & competitive advantage at the top end.

Affluents (1%) Aspirers (17%) Climbers (16%)

Strugglers (66%)

Our Problem therefore

How do we realize our vision of engaging every Indian, every day with a PepsiCo product?
What strategies do we pursue to grow volumes, revenues and profits in a way that ensures we delight and nourish every Indian home? Product range Brands Packs Geography Channel

Q: How can PepsiCo grow profitably across

Indias affluence pyramid?
Case structure: 1. About PepsiCo 2. PepsiCo India and our Vision 3. The India Business some fundamentals 4. Our Business Problem 5. Some Insights that can help you unlock the problem 6. What we need from you 7. How we will evaluate

To help you get started, here are some insights

Understanding consumer attitudes to Food & Beverage What is Value? How consumers make their Save vs. Splurge decisions initial thought starter insights Simple guidelines to value propositions that work, and doing business across the pyramid Learnings from PepsiCos experiences in targeting lower ends of the pyramid Value Foods business, Nourishco

FMCG Growths driven by Foods, more so Impulse

Category Performance across Food Segments: Growing @ 3.8% Volume & 17.2% Value Impulse growing in-home too

Source: Nielsen

Source: HH Panel

The F&B environment is getting more complex

Consumer bombarded with Choice
Exposure to World Cuisines

Marketers entice through Sensorials

Food Courts

Over 500 new launches in F&B in 2011

Modern Trade

Four consumer behaviors are driving growth

Premiumization

Commodity to Brands

Indulgence to Regular

Acceptability

Health has many meanings, and Indulgence is a good thing

Talking Health
Health = Not-Fall-Sick & Do-My-Work Energy Immunity Mental Agility

Walking Indulgence
Pleasure Foods

Personalized consumption (in shared contexts too) Eating well is a way of life, Physical activity is not Balanced Meals 71% Never Exercise Quasi-meals growing

Convenience is attractive but rarely traded for freshness

Off the Shelf Solutions Appreciated
Packaged branded food (impulse, RTE and health foods) growing fastest within FMCG

Yet, a strong urge for fresh food

89% households buy vegetables daily/ alternate days

Saving of effort appreciated > saving of time Process simplifiers (Masalas, batter) growing Ready meals, substitutes less popular Hot = Fresh

Value = Money Well Spent!

SAVE SPLURGE

Scope for Saving

Maximization of Value

Real Quality

Transformation of the Moment! An experience

Does it have the ability to change the consumers reality? Create some transformation of the moment, social context, or at least the mood?
Through superior product quality, imagery or engaging the consumers imagination

Is the pricing such that it allows for a scope for saving beyond the purchase?

Does the purchase derive maximum benefits for the money spent in terms of:
More volume/quantity More benefits Prolonged experience

Does the purchase deliver real quality & trust? Is the purchase seen as a true return on money spent?

Value: What satisfies me in a particular occasion/context

VALUE IS WHAT KIDS LOVE VALUE IS MY FAV. BRAND VALUE IS CONVENIENCE

VALUE IS UTILITY +++

VALUE IS GETTING GOOD DEAL

VALUE IS VARIETY

VALUE IS HERITAGE

VALUE IS WHAT COMPLETES ME

VALUE IS EXPERIENCE

VALUE IS RIGHT QUANT. RIGHT PRICE

Save AND Splurge occur along a perceived Value continuum

CONTROL Money out of Pocket
Cut down
Sacrifice
Abandon Reduce freq. Buy LUP

STRETCH Maximizing Value

Challenge self
Smart Shopping
Compare prices Loyalty/pay back programs Promotions/More for less

PERMISSIBLE INDULGENCE Occasional Treats

Small Treats
High Permission

SPLURGE Luxury & Status

Pamper self
Experience
Pay for the experience Money cant buy offers

Trade down
Compromise
Move to lower labels Reduce variety Delay purchase Portion control

Special Treats
Rationalize

Portion control Cut out frills Advocate sharing Manage experience Reduce frequency Delayed gratification Compensatory Consumption

We use baby diapers only when we go out

Now I mostly use Ghari , Surf excel only for expensive clothes

I buy monthly grocery from wholesale market to get good rates

Instead of 2 separate packs, I buy a family pack of chips and ask my kids to share

Movie is a must but instead of having a sit down dinner, we eat at the food court

important to take our annual vacation to the best place I save up for it

We tailor our offers to suit consumer strategies

CONTROL Money out of Pocket
Cut down
Sacrifice

STRETCH Maximizing Value

Challenge self
Smart Shopping

PERMISSIBLE INDULGENCE Occasional Treats

Small Treats
High Permission

SPLURGE Luxury & Status

Pamper self
Experience

Trade down
Compromise

Special Treats
Rationalize

Loyalty rewards

Wastage is a Crime Exchange Offers a big draw!

A glimpse at what consumers say about Value- Watch the Video

Video Name- Value Video

Inflation & Slow economy pressuring consumers

More than half say their expenses have increased by 40 percent or more and six-in-10 strongly agree that they are saving less than they did last year. As expected, lower income consumers are feeling the inflationary pressure the most. To survive, they are cutting non-essentials and some are even curbing on the essentials too. Surprisingly, upper income households are impacted more strongly than the middle class. They are feeling the pinch on their lifestyle as they try to sustain a status theyve become accustomed to. As middle income consumers have always needed to balance budgets, they are adapting better than other income segments. They carefully consider essentials versus luxuries, which is a practice typical for these households. Hidden Positives As consumers cut back on spending, reducing food expenditures is not the first imperative. Rather, spending on clothing, utility expenses, eating out and out-of-home entertainment and vacations/holidays are the areas that get slashed first when budgets are impacted. In fact, fast-moving consumer goods (FMCG) sales may actually benefit in inflationary times. As budgets get reallocated, consumption on day-today grocery products actually increases.

Attitudes to F&B and to Save-Splurge differ by place on pyramid

F&B Attitudes
Global tastes, Experimentative, Wellness conscious

Attitude to spending, esp. during tight conditions

Pay for the Experience

Affluents (1%) Aspirers (17%) Climbers (16%) Strugglers (66%)

Seek variety, Energy to maximize life, Taste & Indulgence with a touch of familiarity

Compare prices, smart shoppers, Avail offers, Large packs, Defer big ticket, Cut out frills

Energy to sustain, Small indulgences, Familiarity critical

Portion Control, Reduce variety, frequency, Trade down

Basic Nutrition, Gap fill, Rare small treats

Low Unit Price critical, Portion Control, Give up treats

Guide to success at different levels of pyramid

Middle of Pyramid Starting point is non negotiable Business structure Expected returns GTM Manufacturing Key success Ps Consumer Need Marketer Need COST + Profit = Price Med Volume Med Profit Current term, short term Mass Mass Value production Place, Product, Promotion Social Enabler, Trend follower Flawless execution, Discipline Bottom of Pyramid Price Profit = COST High Volume, Low Profit Long term Mass, with Alliances Mass Value production Price, Product, Place Performance critical, Solve a real need Patience, Investment for future Top of Pyramid PROFIT + Cost = Price Low Volume, High Profit Medium term, long term Niche/Personalized, with Alliances High end packaging, small production runs Promotion, Product, Packaging Individualistic needs, self reflection, Trend setter Imagination Style

Value Propositions & Strategies that Work

From Dust to Dollars

Creating value from underutilized assets

Pricing Strategies
Down-sizing (grams reduction) minimizes the volume loss for impulse and non-essential products versus increasing price. The premium segment is the strongest revenue growth driver.

Lock-In Strategy
Create a high barrier to switch to a competitor

Small packs are less sensitive to pricing changes and can gain higher revenue during price increases.
Larger packs tend to be highly sensitive to pricing changes. Price increase will result in both volume and value losses. Distribution is critical in mitigating inflation risks and direct distribution channels are significantly better in driving volume share for brands.

Blended Value Proposition

True value is nondivisible, consisting of a blend of economic, social, and environmental components

Brands provide value in many different ways

Good to eat with tea Is good to serve to guests Is for the whole family Good to eat at home Better for you than other snacks Useful information on pack Is a everyday kind of snack Good to share with others Good to eat with friends Brand that my friends prefer Difficult to stop once start eat

Has good taste Is fun to eat Is great tasting

Is easily available

Is a very high quality Is always fresh Is trusted & reliable

Attractive & Eye-Catching pack Is an International brand

Is a popular brand Can be eaten anytime

I feel proud to consume Makes me feel good

Have appealing advertising

Extent of importance of the dimensions vary across category, cities & demographic groups

Early learnings from PepsiCos initiatives for the lower levels of the pyramid: Value Foods Business Nourishco (value added hydration)
The

We anticipated that local brands (value play) will grow faster

based on learnings from other category experiences
High Positive Correlation Of Penetration with Value Play
Degree of penetration (% HHs)

Other Categories Have Witnessed Value GrowthDetergents Best Example

Nirma's value play structurally changed the market 555
Volume (M Tons) Others Nirma +21% Nirma's 360 launch

100

555

Tea2
80

Detergents

Bar Soap

60

Salty snacks - 2015

Plain biscuits

Toothpaste Shampoo Toilet Bathroom Cleaner Salty snacks - 2009 Coffee

40 20

+14%
26 49

122

0 0

Noodles Sanitary Protection

20 40 60 80

Limited value play Some value play Significant value play

100

1970 48 67% --

1975 1980 1985 80 180 22% 31% 475

1988 690 14% 59%

Annual PCC (Gms) Market Share (Surf / Nirma)

Degree of value1 play in category (% sales by value)

Product: Better than laundry soap; Price: ~1/3 to surf, parity with value Reach: Started from Gujarat & than expanded; Brand: Significant spends on TV, POS

And understood what drives their success

Driven by proliferation of players from <100 to >1500
A Player Category CAGR 23% (Value CAGR 26%) B Player Category CAGR 50% (Value CAGR 41%)

Simple yet Efficient Business Model

Advantaged Consumer Offering 10-20% more than lead A Brands Locally relevant taste, basic Benefits, Acceptable Quality More margins to the Customer Offer 20-30% more margins than A Players Locally manufactured and distributed Go deep in a 200-300 km radius vs spreading wide Passive GTM set-up through wholesale

Vol M Tons

B Play Mix

2005 2006

2007

2008

2009

2010

2011

Vol Val

27% 20%

54% 44%

Low on Fixed Costs and nimble on opportunities Pricing//seasonality Minimal A&M//Fixed Manning

And set up our Value Foods business accordingly

Key Insights About Our Consumer
Daily//fluctuating monthly income
(72% of the same is spent on food)

Led us to follow a simple approach

Share Gain > Category Development

With Business Model the key focus area

Make trade-offs between items not Brands Believe in the tried and tested minimize risk Looks for functional benefits Evaluative shopperlooks for simple maths for benefits Dont stock upbuy small from the neighboring store Me Too (Ph 1) => Advantaged (Ph2) Focus on WHO X WHAT (At What Price)

1. Provide Me-TooDont reengineer

2. Namkeen the key to success 3. Selective play in WS in LUP 4. Umbrella branding the key 5. Region/State co-packs

In LRB, despite low per caps, value play low,

possibly because of 2 large players, and the absence of low price points
LRB in India < 1% of total beverages consumed; per caps restricted
Lower LUP a big unlock across categories
% of Revenue from Value portfolio

Unpackaged 99%

Packaged 1%

175

135

Huge LRB Per Caps Headroom

Biscuits

Detergent

Soaps

Tea

Salty Bev. Snacks

65

32

No PI play in low unit price points

China

Egypt

Pak

India

Rs. 1 2

8 10

15

20

Welcome to the Value added world of beverages!

A JV between two giants! World leaders in Food & Beverage

Creators of the worlds cheapest car

Nourishcos focus is on value added hydration

at both top and bottom ends of the pyramid

Indias first fortified water: taste neutral, in both pet and water, launched with Zinc

750ml Rs 16/-

Affluents (1%) Aspirers (17%) Climbers (16%) Strugglers (66%)

Premium source water from the Himalayas

Indias first ready-to-drink glucose energy drink, with salts for replenishment

200ml Rs 2/-

Q: How can PepsiCo grow profitably across

Indias affluence pyramid?
Case structure: 1. About PepsiCo 2. PepsiCo India and our Vision 3. The India Business some fundamentals 4. Our Business Problem 5. Some Insights that can help you unlock the problem 6. What we need from you 7. How we will evaluate

Help us with answers to

What is the right brand x pack x geography portfolio of brands mix (keeping in mind the 70:30 rule of existing brands: new brands) for the different consumer groups across the value ladder. And why do you say so. Please outline clearly the principles of making these choice. What is the most effective (driving volumes/growth) and efficient (profitable) way of reaching the different consumer groups (Reach as defined by GTM model AND Reach also as media model):
To drive penetration, getting to new consumers that currently dont eat/drink our brands/category To drive frequency, getting existing consumers who already eat/drink our brands, to eat/drink more

Which other company in India should be the benchmark company for PepsiCo to learn from in this area? Please give a detailed account of points 1 and 2 above for them, and how they do it. And please present back at least 1 case study, but preferably 2 case studies as below
Case study of a company that is able to straddle many consumer groups on the ladder Case study of a company that has focused on only one (or two) groups of the consumer ladder

Based on your primary/secondary research, please recommend consumer solutions (new product, new packaging, new channel, new pack, etc.) that we could be missing, in playing meaningfully against one or more of the consumer segments

E.g. a simple framework like this

Affluents
Consumer Offerings 1 2 3 4 1

Aspirers
2 3 4 1

Climbers
2 3 4 1

Strugglers
2 3 4

Other Cuts

Product Range
Brand Brand Promise Pack Price GTM Model Geography

Channel
Growth Driver for PepsiCo Volume Revenue Profit
Other e.g. penetration/frequency

Q: How can PepsiCo grow profitably across

Indias affluence pyramid?
Case structure: 1. About PepsiCo 2. PepsiCo India and our Vision 3. The India Business some fundamentals 4. Our Business Problem 5. Some Insights that can help you unlock the problem 6. What we need from you 7. How we will evaluate

Phase OneIn phase one- we expect you to submit a short summary of your solution- not exceeding 5 MS Powerpoint Slides or 3 MS Word pages. Phase TwoA PepsiCo panel will go through and evaluate all the submitted entries. The shortlisted teams (on the basis of the brief summary) will be expected to detail the solution submitted in Phase 1. You need to submit a solution in MS Powerpoint and not exceeding 40 slides. Phase 3- The India Finals After we receive the detailed solutions in Phase 2, the panel will shortlist the Top 6 Teams across the country and the best team from each campus The Top 6 teams will be invited to Gurgaon to present their solutions to the India Region Leadership Team Phase 4- The Grand Finale! The winners selected at India level will fly to New York to present to Indra

CONTEST 2012 Phases

Not more than 5 MS Powerpoint Slides or 3 MS Word pages per entry will be entertained for the first shortlist.
If we receive more than the expected number of slides/pages only the first 5 slides/first 3 pages will be considered.
If shortlisted, you will get the chance to submit a more detailed entry for the next round. Evaluations will be on the basis of: Appreciation of the business problem Power of Insight identified for the situation analysis Case parallels used appropriateness and depth Creativity and Feasibility of solutions proposed Clarity of articulation/presentation

There are no limits to growth because there are no limits of human intelligence, imagination, and wonder!

Every Indian Every Day!

Can YOU help PepsiCo India realize this vision?

Appendix
1. 2. 3. 4.

Socio Economic Classification (SEC) Grid ESOMAR Paper Glossary Websites for more detail on our brands etc
www.pepsico.com www.pepsico.in

Based on education and occupation of the chief wage earner

EDUCATION Literate no school Schoo l up to 4 yrs School 5-9 yrs HSC+ / not Grad Grad/ Post GradGen. 7 D B2 B2 A2 A2 A1 A1 Grad/ Post GradProf. 8 D B2 B2 A2 A1 A1 A1

Urban SEC Grid:

CIRCLE SEC CODE

Illite-rate

School 10+ yrs

OCCUPATION Unskilled Workers Skilled Workers Petty traders Shop owners Businessman/Industrialist s with no. of employees None 1-9 10+

CODE 1 2 3 4 5 6 7

1 E2 E2 E2 D D C B1

2 E2 E1 D D C B2 B1

3 E2 E1 D D C B2 B1

4 E1 D D C B2 B2 A2

5 D C C B2 B1 B1 A2

6 D C C B1 A2 A2 A1

Self employed professionals

Clerical/Salesman Supervisory level Officers/Executives - Junior Officers/Executives-Middle/Senior

8
9 A B C

D
D D C B1

D
D D C B1

D
D D C B1

D
D C C B1

B2
C C B2 B1

B1
B2 B2 B1 A2

A2
B1 B1 A2 A1

A1
B1 A2 A2 A1

Based on the Chief wage earners education, occupation as well as the type of house

Rural SEC Grid:

Glossary
o o

o
o o

o o o o

o o

LRB (Liquid Refreshment Beverages)- Ready to drink packaged drinks CSD- Carbonated Soft Drinks MBD- Mango based drinks BD- Juice based drinks Extruded- Range of puffed snacks made of rice/corn available in different shapes/colours/flavors/sizes. Product types: Cheese balls/puffs/Tomato wheels Bridge- All New Age snacks that are neither potato chips nor conventional Indian namkeens but borrow taste/texture/palette from both. Product types: Shapes/textures/flavors like irregular sticks/twists/triangles PC- Potato Chips Cases Per Annum- Average Number of cases sold by the category of outlet in a year SAMNA- Stands for Sales Automation Management for New Age. It is a Power of One Go To Market IT Solution for PepsiCos Beverage and Snacks businesses. MS- Multi Serve; SS- Single Serve Hub: They are large distribution centers who receive stocks from PepsiCo factories / WH; Strategically located so as to have better efficiency of cost in maintaining stocks, delivery & traffic; They maintain stocks in good condition; They ship the stocks to spokes as per PDP / order confirmed by RSP ; Spoke is the link between Hub and Outlet in PepsiCos Distribution System. Urban Spoke: Is a small distributor in a suburb close to any major City. For the reason of viability of operation / coverage, if the city distributor is not in a position to supply regularly to those markets, Urban Spoke helps in distribution width. Rural Spoke: Typically appointed in any Rural market. Classification of Spokes: <3000 Cs AOP : C class, 3000-6000 Cs AOP: B class & >6000 AOP: A class.

So Many Different Suns!

how successful brands hit the conflux of affordability and aspiration
ESOMAR paper presented at Asia Pacific Conference, 2012