Jul. 1, 2009 (The Hindu Business Line) --
Vinay Kamath
Sravanthi Challapalli
It’s been a prolonged summer. How has the season been for you and how have the new launches, Nimbooz and Aliva, done?
Sanjeev Chadha: On the beverages side, it’s been an absolute banner year so far. We are growing at over 30 per cent in terms of volume and 40 per cent in revenue, year to date. So really it’s been an exceptional year on all fronts and yes, it’s been growth across all categories. Both carbonated soft drinks (CSD) as well as our non-carbonated portfolio. The non-CSD portfolio’s off a smaller base and it’s growing faster but, of course, in terms of volume and absolute numbers, both are growing very well.
The growth’s really driven by three or four different factors, one of them definitely is our innovation agenda. Nimbooz has been our large, new innovation this year, and it’s really been much beyond our expectations, it has gone through the roof. We are struggling to supply the marketers; so we had to curtail the launch to a certain set of cities. The consumer has been absolutely delighted with the product and its genuine taste – asli Indian, asli nimbu paani, and that’s what’s clicked with the consumer. Our innovation in terms of new formats, the slim cans you see, are doing well too. Our overall theme of building a powerful portfolio of products which addresses different needs of different kinds of consumers for different occasions … that’s what is really working for us.
Why didn’t a product like Nimbooz come out earlier?
The beauty of this product is its simplicity. We all know nimbu pani is the national soft drink. But the reason why not earlier is technology. Nimbu pani when you make it fresh and drink it fresh is delightful, but it doesn’t have much shelf life. This (pointing to Nimbooz) looks similar to any bottle of soft drink but the fact is it’s a totally different technology, called hot fill, and has a shelf life of as much as four months. The same taste even if you have it a month, two months later. Given India’s diverse and wide geography, it’s important to have a stable, safe and hygienic product.
Did it come from local R&D?
Team work but local R&D had an important role to play.
How was growth last year over the previous year?
The beverages industry is rapidly accelerating, that’s what we’re seeing and experiencing year on year. The year 2008 was double the growth rate of 2007, and 2009 has been higher still.
That’s why you announced this recent investment?
Yes. This year, PepsiCo (NYSE:PEP) is investing the highest amount in India in the last 19 years, and on top of that, because of the huge growth and the significant momentum continuing, we decided to invest an additional $110 million, taking the total annual investment in 2009 to $220 million.
So this will essentially go into bottling capacity?
Bottling capacity, marketplace infrastructure investment, innovation and R&D and sustainability projects. But incremental investment is indeed a lot more in the first two.
PepsiCo internationally and in India as well has been projecting itself as more than a beverage company with a healthier portfolio. How much of it have you been able to achieve? You also face intense competition from a host of regional brands…
Gautham Mukkavilli: We started this whole journey of portfolio transformation four-five years ago. We started with small steps — did away with MSG, introduced Quaker Oats three years ago, started marketing it for cholesterol reduction. The brand is booming, it’s our fastest growing trademark today, doubling volume every year.
