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Pepsi looks at packaging to drive consumption

21-August-2004
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Pepsi looks at packaging to drive consumption

After reworking the pricing strategy to drive value growth in soft drinks, PepsiCo India is thinking about changing the way its products are packaged and sold at present.

As of today, PepsiCo's soft drinks brands are sold in 200 ml and 300 ml returnable glass bottles (RGBs) while non-returnable PET bottles form a small portion of the company's total sales. The third kind of packaging - cans - is also small in number due to prohibitive costs.

"Packaging is the major trigger which drives consumption. Today, the most immediate trigger to buy an RGB of soft drinks is heat and thirst, but this does not promote consumption at home and on other occasions because the bottle has to be returned. PepsiCo is considering altering the packaging so that non-RGB packs increase," the Chairman, Mr Rajeev Bakshi, told Business Line.

He said that while the use of PET bottles is limited by their being porous in nature, promoting soft drinks in cans will drive consumption. "Also, can we offer the consumer a 300 ml PET bottle at the same price as a 300 ml RGB? We are thinking on these lines," he said.

Also on Mr Bakshi's horizon is development of alternative beverage categories to fuel growth. The company has decided to get into iced tea by bottling it in both RGBs and PET, using the bottling network of its fruit drink Slice early next year.

"We are debating on how to offer juices at the price of a soft drink, apart from getting into iced tea. Is it possible to offer a 200 ml juice at Rs 8-10? This is what we are working towards," he said.

While all these initiatives - altering the packaging in favour of non-returnable packs' consumption, entering alternative beverage categories - will be pursued in the long run, Mr Bakshi has also trained his guns on doubling the per capita consumption of soft drinks by breaking down what he calls "barriers to consumption."

"The company is into its third phase of growth in India. Till a few years back, we were busy putting up our infrastructure and growing it. Then came the lower price point strategy to grow sales volumes. The third phase should see our energy concentrated on doubling the per capita consumption of carbonated soft drinks," Mr Bakshi said.

The company is already wondering whether to go in for a second price increase for the 300 ml pack size early next year, thus signalling its arrival into the third phase of growth in Indian operations.

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