PEPSI’S ENTRY STRATEGYIN INDIA

Submitted by:Shashank Chauhan

A letter to Pepsi

• History about a PEPSI.• 1988 a letter received New York office by India.• India is a lucrative destination for PEPSI.• Consumption of PEPSI per capita is very low as

compared to Thailand and Egypt.

The promises that helped Pepsi enter

• In May 1985 joint venture with R P Goenka (RPG) group.

• Pepsi agreed to export juice from north Indian state Punjab.

• Government rejected a proposal on two basis • Cause regarding a import of cola concentrate• Use of forgian brand name Pepsi.

Promises of a Pepsi

• Company create a jobs of 50,000 over nation and 25,000 in Punjab.

• Foreign brand name would not be used.• agricultural research centre would be established.• Company focus 75% on agro processing and 25% on

investment.• Company will bring advanced food processing

technology in India and also boost Indian products in international market.

• Export import ratio would be 5:1

Pepsi promises keep some break some

• Pepsi claimed it provided 26000 employment where it counted indirect employment actually it was only 2400.

• 50% of employers are working on concentrate and bottling business and not on food processing business.

• Future polymer limited replaced many workers by machinery.

• Pepsi export glass products, leather product instead of fruits and vegetables.

• As a name Lehar Pepsi, Pepsi was given prominent position while Lehar had given background position.

Problems faced by Pepsi to fulfill its commitment

• Local tomatoes were of very low quality.• Pepsi took long time to convince farmers to work

with company as a contract farming.• For payment, 80% of farmer did not have their bank

account.• In 1990, crops was harvested but Zahura plant is not

ready to start a production.• Pepsi failed to export 50% of its production.• Pepsi paid farmers par kg less than a market value

and chosen only large farmers, got such a comments.

A boon for Pepsi

• In 1991 liberalizations economy policies were introduced.

1)The removal of numerous restrictions on foreign trade.

2) Increase role of private equity in Indian markets.

Major advantages of liberalisation for Pepsi

• Removed investment in Soft Drinks business 25% of the overall investment and required it to export 50% of its production.

• 1994 Pepsi bought of its partner in the venture, while Voltas sold off its stake completely.

• Company established a wholly owned subsidiary, PepsiCo. Holding India Pvt.Ltd.(PHI)

Major profit

• In 1995 beverage business grew by as much as 50%.• In 1996 PHI’s turnover surpassed Pepsi’s turnover by

Rs. 1.25 billion.• In 1996 plastic export hiked 67%• In 1997 agro-research center promised by the

company was nowhere in sight.

Contract firming for Pepsi

• Introduced contract firming in • Tomato(1991)• Chili(1997)• Basmati rice(Oct-1999)• Ground nut(2000)

Major failures and investment

• Pepsi failed in chili contract firming (cultivation land reduced 1750 acres in 1997 to 300 acres by 2000)

• In June 2000,Pepsi prevailed plan to invest Rs.1.25 billion every year in Karnataka.

• Since Pepsi's entry in India it invested 18 billion by 2000 (1.5 billion was invested in Punjab, Where around 8,000 people were working for the company.

Major export for Pepsi for dong business in India

• Major export items(Processed foods, Basmati rice, guar gum, soft drink concentrate

• In 2000 potato requirement was 25,000 tonnes per annum but Pepsi could fulfill only 3,000 tonnes.

• In August 2002, Pepsi joined hands with Punjab state government for export of process citrus fruits.

Conclusion

Pepsi could achieved whatever they wanted which cola could not do so and Pepsi could established by 2003 firmly in India it informed usThat Pepsi came with strong strategy to catch up the

Indian market and use Indian cheap labour and resourses for increase their overall revenue and profit