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PepsiCo: Breeding Reverse Innovation in India

...we are looking at how we can leverage the best of PepsiCo India and built it to scale. India is going to be our biggest learning lab. The best vision for the next 10 years has come from India.1 Indira K. Nooyi (Nooyi), Chairman and CEO, PepsiCo A decade ago, companies leveraged global markets with existing brands and solutions; today they are turning to technologies, processes and even products across the spectrum from various markets. The flip is not difficult to foresee.2 Sanjeev Chadha, Chairman, PepsiCo India

PepsiCos growth in the emerging Indian market is driven by product innovations such as Kurkure, Nimbooz and Aliva. After 10 years of Kurkures success, in 2009, Nimbooz, a lemon refreshment drink and Aliva, a healthy eat snack were launched. With the launch of innovative products and processes and thereby achieving cost-efficiencies, PepsiCo India has become a benchmark for all other regional units of the company. The company is taking these successful innovations from India to developed and highly competitive markets of US, UK and West Asia. However, the question is what challenges would the company face when such regional innovations are taken to mature and competitive markets? Can PepsiCo replicate its regional success globally? Many wonder whether would this be a new trend for MNCs operating in emerging markets, i.e., exporting successful product innovations from emerging markets to developed countries markets.

1 2

Saran Rohit and Pande Shamni, India is Going to be Our Biggest Learning Lab, Business Today, January 24th 2010, page 52 Pande Shamni, How India is changing PepsiCo, http://businesstoday.intoday.in/index.php?option=com_content&task= view&id=13663&issueid=&sectionid=25, January 11 th 2010

This case study was written by Fareeda and Syed Abdul Samad under the guidance of Dr. Nagendra V. Chowdary, IBSCDC. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources. 2010, IBSCDC. No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.

PepsiCo: Breeding Reverse Innovation in India

PepsiCos Organic and Inorganic Growth: Innovation Focused?

PepsiCo was founded in 1965 with the merger of Pepsi-Cola 3 and Frito-Lay4. At the end of the year, PepsiCo had about 19,000 employees and reported sales of $510 million. This merger allowed PepsiCo to have product lines for both beverages and foods. PepsiCo had beverage brands Pepsi-Cola (1898), Diet Pepsi (1964) and Mountain Dew (acquired by Pepsi-Cola in 1964, which was introduced by Tips Corporation in 1948) and food brands Fritos chips (1932), Lays potato chips (1938), Cheetos flavoured snacks (1948), Ruffles chips (1958) and Rold Gold pretzels (acquired by Frito-Lay in 1961). With these brands, since 1966, PepsiCo expanded its presence in US and also entered global markets such as Japan and Eastern Europe (1966), Russia (1972), China (1982), India (1988), etc. By 2008, PepsiCo grew to become the worlds leading food and beverage company, reaching a mark of $43 billion in revenues starting from $1 billion in 1970 crossing different milestones in its journey (Annexure I). Though present in 200-plus countries, US, Mexico, Canada and UK are its major revenue generating markets (Exhibit I). In the process of its expansion, PepsiCo streamlined its efforts in developing competitive products through innovations and acquisitions.

Exhibit I Regional Distribution of PepsiCos Revenues in 2008 (in $ million)

Others $12,806 United States $22,525

United Kingdom $2.099 Canada $2,107 Mexico $3,714

Source: Our Business, http://www.pepsico.com/Purpose/Sustainability/ Sustainability-Report/Our-Business.html

PepsiCo: Product Profile

PepsiCo has the worlds largest portfolio of food and beverage brands providing competitive strength to the company. It has about 18 different product lines such as Pepsi-Cola, Quaker, Tropicana, Frito-Lay, etc. (Annexure II), each of which generates more than $1 billion in annual sales worldwide.5 With its strong brand portfolio, the company serves about 86% of the world population spanning across Europe, Middle East, Asia, Africa and Australia. 6 PepsiCo developed various products under its product lines catering to different needs and preferences of the consumers in the respective countries. PepsiCos broad portfolio is a combination of its in-house developments and acquisitions. The company has a strong history of acquisitions which included popular brands such as Mountain
3

Pepsi-Cola was created by Caleb Bradham, a New Bern, N.C. pharmacist, in 1898. In 1965, the then president and CEO of Pepsi-Cola, Donald M. Kendall, entered a merger agreement with Herman W. Lay, chairman and CEO of Frito-Lay to form PepsiCo.

Frito-Lay, Inc., was formed in 1961 with the merger of the Frito Company (founded in 1932 by Elmer Doolin) and the H. W. Lay Company (founded by Herman W. Lay in 1932). Our Business, http://www.pepsico.com/Purpose/Sustainability/Sustainability-Report/Our-Business.html PepsiCo 2008 Annual Report, http://www.pepsico.com/Download/2008-Annual-English.pdf, 2008, page 6

5 6

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Dew, Tropicana, Quaker, etc. It acquired, merged and entered into partnerships with companies to increase its presence worldwide and own popular brands (Annexure III). Though acquisitions have played a strong role in its growth, PepsiCo does not depend solely on them. The company, through its research, has developed brands such as Pepsi-Cola, (its iconic brand), Gatorade (popular sports drink), Ruffles chips, Doritos Tortilla chips, etc., that top the charts of the popular brands across globe. Being a leader in the food and beverage industry, PepsiCo not only delivers great tasting products but also ensures their nutritional value. With its wide product range from tasty treats to healthy eats it encourages people to adopt healthy and active lifestyles. Indira K. Nooyi (Nooyi), chairman and CEO, PepsiCo says, All over the company, we have Performance with Purpose as our mission. And the way we achieve it, all over the world, is always to encourage new ways of working. Innovation is our lifebloodit drives success in all our businesses.7

PepsiCo: Research and Development (R&D) Operations

Aiming at providing healthy life to consumers through its products, PepsiCo expanded its state-of-the-art R&D facilities across the globe, leveraging on its operational capabilities. PepsiCo has nine research labs: four in US Valhalla (NY), Plano (Texas), Barrington (Illinois) and New Haven (built in 2009), two in Mexico at Monterrey and Mexico City and one each in Leicester (UK), Shanghai (China) and New Delhi (India). In addition to these research centres, PepsiCo also has satellite centres in Thailand, Brazil and Australia. PepsiCo is even expanding its research base by entering into research partnerships with leading institutions such as Yale University, Dresden University, Westfalische Wilhelms-Universitat Munster, Germany and a few Indian universities. These research centres along with research labs, focus on developing calorie-free and customised products across the globe. PepsiCos R&D teams continuously make efforts to develop new products or reformulate existing products offering nutritional benefits and reducing harmful contents such as, saturated fat, sodium and added sugar. For instance, the company had introduced (in 1993 in US) Baked Lays and Baked Walkers in UK and Europe with about 70% less fat than regular crisps.8 In India, PepsiCo uses rice bran oil instead of palmoline oil, reducing saturated fats by 40%.9 To expand its R&D efforts, the company has increased its R&D investments from $282 million in 2006 to $364 million in 2007 and $388 million in 2009.10 Continuing with its innovation in healthy foods it came up with TrueNorth, a nut snack. The companys research team had combined nuts like almonds, peanuts, walnuts, etc., into an innovative new snack with great taste and nutritional benefits. In 2008, it even launched Quaker High Fibre Oatmeal under Quaker Oatmeal line with about 40% of daily fibre value.

7 8 9 10

PepsiCo 2008 Annual Report, op.cit., page 7 PepsiCo Opens a Research Lab To Develop Healthier Products, http://popsop.com/30489, December 9 th 2009 Ibid. PepsiCo 2008 Annual Report, op.cit., page 6

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Regarding the strategy of coming up with healthy products, Nooyi explains, Our strategy is to rapidly expand our good-for-you portfolio. PepsiCo currently has around a $10bn crore of goodfor-you products, anchored by Tropicana, Lebedyanski, Quaker, and the new dairy joint venture we entered into with Alamarai. We will augment the organic growth of these platforms through an increasing stream of science-based innovation. Some of these new products we plan for will come from targeted acquisitions and from joint ventures. But the larger number will be generated from the R&D that we have been ramping up over the past couple of years and which we will continue to expand.11 Besides marketing its products as healthy, it had started planning its acquisitions matching its sustainable commitment. Shifting from its earlier strategy of acquiring chips and soft drinks producing companies, it started acquiring companies producing juices, dairy products, hummus 12 and nuts and seeds. This is evident through its acquisition of Naked Juice Company (2006), Vitamin Water brand V Water (2008), Amacoco (coconut water company) (2009), etc. On the acquisition of Amacoco in 2009, Massimo dAmore, CEO, PepsiCo Americas Beverages (PAB), commented, Were delighted to welcome Amacoco into the PepsiCo family. Combining Amacocos expertise in naturally healthy coconut water with PepsiCos strong brand portfolio and R&D capabilities creates the potential for very exciting product innovation. 13 PepsiCo performs its R&D on a global-regional platform. The research teams develop new products under PepsiCos global brands at regional levels as per the needs of regional consumers. As per the companys annual report, 2009, through a combination of tuck-in acquisitions and innovation, we plan to continue to broaden the range of products we offer in our existing categories and expand into adjacent ones. We are also committed to securing our innovation pipeline, and have coordinated our research and development departments across the Company into one global innovation team.14

PepsiCos Organisation Structure

PepsiCo had adapted to several changes in its organisation structure throughout its history of building successful food and beverages business. Since its formation in 1965, PepsiCo had expanded aggressively worldwide with its strong brands, marketing and distribution capabilities. In 1986, the company organised its food and beverages business worldwide into two business units PepsiCo Worldwide Beverages and PepsiCo Worldwide Foods. After a decade, in 1996, PepsiCo re-organised its beverages and snack food operation from both domestic and international markets into Pepsi-Cola Company and Frito-Lay Company, respectively. During this period, though Pepsi-Cola Company was present in about 190 countries, more than 70%

11 12

Ben Cooper, In the spotlight - PepsiCo, http://www.just-food.com/article.aspx?id=109824&lk=dm, February 12 th 2010 Hummus is a creamy puree of chickpeas and sesame seed paste seasoned with lemon juice and garlic. It is a popular spread and dip in Greece and throughout the Middle East BRAZIL: PepsiCo acquires coconut water firm, http://www.just-drinks.com/article.aspx?id=98135, August 12 th 2009 PepsiCo 2008 Annual Report, op.cit., page 42

13 14

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of its sales were from North America.15 Its growth in US was attributed to the successful promotions, new products, convenient packaging and strong distribution through supermarkets (51%) and mass merchandisers (6%). Frito-Lay Company, however, was the leader in snack foods in North America and other international markets.16 In 2002, PepsiCo had again reorganised its structure based on its strong growth in North America, which became an important market for PepsiCo and presented the potential of becoming a leading beverage company there. Therefore, PepsiCo combined all its North Americas operations into a new business unit PepsiCo Beverages and Foods North America including Frito-Lay North America as a division. The other unit PepsiCo International (PI) combined the overall food and beverages operations in international markets other than North America. PI included Frito-Lay International and PepsiCo Beverages International divisions. Since 2002, PepsiCo witnessed robust growth worldwide, with its overall revenues growing from $25 billion in 2002 to $35 billion in 2006 and $39 billion in 2007. The companys growth in other developed and developing countries other than US and Canada also started ramping up. The food and beverages from international markets accounted for 37% of PepsiCos overall revenues in 2006, a 6% increase from 31% in 2002.17 PepsiCo perceived immense scope for growth in these countries as the per capita consumption of many of them was less. To manage its expansion and growth in a better way, again in 2007 PepsiCo witnessed a restructuring. The earlier two business units PepsiCo Beverages and Foods North America and PepsiCo International (PI) were reorganised as three units and had six reportable segments (Exhibit II). Justifying the reorganisation of PepsiCos structure, Nooyi commented, Given PepsiCos robust growth in recent years, we are approaching a size which we can better manage as three units instead of two. Creating units that span North American and international markets, as well as developed and developing markets, allows us to better share best practices among our North America and international businesses, while providing valuable development opportunities for our senior executives.18 Nooyi believed that the new structure would help the company in its growth and said, I am confident this organisational structure will help us deliver strong top-line performance and consistent double-digit profit growth in the years ahead. 19

15 16 17 18

1996 PepsiCo FactsBeverages, http://www.pepsico.com/Annual-Reports/1996/beverages.html Ibid. PepsiCo 2006, http://www.pepsico.com/Download/2006-Annual-English.pdf, 2006, page 1 PepsiCo Unveils New Organizational Structure, Names CEOs of Three Principal Operating Units, http://www.flex-newsfood.com/pages/12058/Pepsi/pepsico-unveils-new-organizational-structure-names-ceos-three-principal-operating-units.html, November 5 th 2007 Ibid.

19

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Exhibit II PepsiCos Organisation Structure PepsiCo

PAB

PAF
FLNA QFNA LAF

PI
UK/Europe Middle East Africa/Asia

Business Units: PepsiCo Americas Foods (PAF), which includes Frito-Lay North America, Quaker Foods North America and all of our Latin American food and snack businesses (LAF), including our Sabritas and Gamesa businesses in Mexico. PepsiCo Americas Beverages (PAB), which includes PepsiCo Beverages North America and all of our Latin America beverage businesses. PepsiCo International (PI), which includes all PepsiCo businesses in the UK, Europe, Asia, the Middle East and Africa.

Reportable Segments: The three business units were comprised of six reportable segments. Frito-Lay North America (FLNA) Quaker Foods North America (QFNA) Latin Americas Foods (LAF) PepsiCo Americas Beverages (PAB) United Kingdom & Europe (UKEU) Middle East, Africa & Asia (MEAA)

Source: Our Business, http://www.pepsico.com/Purpose/Sustainability/Sustainability-Report/Our-Business.html

Later in 2009, the company realigned few countries in its divisions and renamed its divisions to be consistent with the changes in geographic responsibility. Under the business unit, PI, PepsiCo realigned its businesses in Turkey and certain parts of Central Asia. These countries, which were earlier the part of its Middle East,Africa/Asia (MEAA) division were now under UK and Europe (UKEU) division. It even renamed its divisions MEAA as Asia, Middle East and Africa (AMEA) and UKEU as Europe division. From its revenues of $43 billion in 2008, 42% of the revenues were from international market

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mainly from UKEU (15%), Latin America Foods (LAF) (14%) and MEAA (13%) (Exhibit III). Moreover, the emerging markets mainly Brazil, Russia, India and China (BRIC) are its growth frontiers.20

Exhibit III Divisional Revenue of PepsiCo (in $ million)

2008 2007 2006 2008 2007 2006 Net Revenue FLNA QFNA LAF PAB UKEU MEAA Total division Corporate net impact of mark-to-market on commodity hedges Corporate other Operating Profit

$12,507 $11,586 $10,844 $2,959 $2,845 $2,615 1,902 5,895 1,860 4,872 1,769 3,972 10,362 4,750 3,440 35,137 582 897 2,026 811 667 7,942 (346) (661) 568 714 2,487 774 535 7,923 19 (772) 554 655 2,315 700 401 7,240 (18) (720)

10,937 11,090 6,435 5,575 5,492 4,574

43,251 39,474

$43,251 $39,474 $35,137 $6,935 $7,170 $6,502

Net Revenue MEAA 13% UKEU 15% FLNA 29%

Division Operating Profit MEAA 9% FLNA 37%

UKEU 10% QFNA 7% PAB 25% QFNA 4% LAF 14%

Source: PepsiCo 2008 Annual Report, http://www.pepsico.com/Download/2008-Annual-English.pdf, 2008, page 71

PAB 26%

LAF 11%

PepsiCos Reverse Innovation from India

PepsiCo in Emerging Markets
The emerging markets across Asia, Eastern Europe and Latin America have become important markets for the growth of PepsiCo. The company has been investing in emerging, large consumer markets of BRIC through innovative products and acquisitions. PepsiCos expansion into emerging
20

PepsiCo 2008 Annual Report, op.cit., page 6

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markets helped it withstand the impacts of 2008 economic recession. During the financial year 2008, the revenues and operating profit from the beverages business in PAB declined by 1% and 7% respectively (of previous year) due to economic recession and high commodity prices. 21 Despite the decline in its beverage business in America, the company presented a profitable picture from its food business performance and sales increase from the international market, emerging markets being key areas. The PI business unit spanning across Europe, AMEA and Australia had reported a revenue growth of 19% in 2008 from the previous year.22 PepsiCo being the second-largest beverage company in the world after Coca-Cola focuses on emerging BRIC countries to broaden the expansion and sustain its worldwide growth. John Sicher, editor, Beverage Digest, justified, Beverage companies are focusing on emerging markets like Brazil, Russia, India and China the so-called BRIC countries since growing there is necessary for their overall long-term growth. The future growth potential of those markets is significant, and they have to have the brands, products and infrastructure to capitalise on that.23 PepsiCo is investing in key emerging markets of Brazil, India, Mexico, China, etc. In Brazil and India, the company is expanding its capacity and R&D operations and combining both with sustainability agenda. In Mexico, the company is planning to invest in R&D, manufacturing, distribution and advertising, whereas in China, one of its fastest-growing markets, PepsiCo is investing in expanding its capacity, R&D, distribution, brand building and resource conservation. Nooyi justified the companys investments saying, Across our businesses, we are investing aggressively in R&D to drive innovation to further differentiate our brands; and we believe now is the time to invest in key markets that represent enormous opportunities for years to come.24 PepsiCo has a long history of its presence in key emerging markets and is still expanding. Though Pepsi was introduced in Russia in 1959, PepsiCo had actually started its marketing and distribution in 1972. Since its entry in Russia, PepsiCo had rapidly expanded its operations. It introduced its popular carbonated drink brands like Pepsi-Cola, Pepsi Light, Pepsi Twist, Pepsi Max, Mountain Dew, Mirinda and 7UP in the country. But half of its sales were from non-carbonated drinks such as juice, tea, water and energy drink brands like Aqua Minerale, Gatorade, Adrenaline Rush, Tropicana fruit juices and Lipton Ice Tea. PepsiCo even expanded its food business in the country with its Frito-Lay snacks. It built a snack manufacturing facility in Kashira, Moscow in 2005, investing about $100 million and began local production, becoming the largest snack manufacturing company in Russia and Europe.25 PepsiCo had been investing in the country to build its business by customising its products as per the needs and preferences of the Russian consumers. On the same lines, the company introduced

21 22 23

PepsiCo 2008 Annual Report, op.cit., page 5 Ibid., page 6 PepsiCo bets big on Russia; Soft U.S. sales spur $1 billion plan; Report: Boeing to buy Russian titanium for 787, http:// www.thefreelibrary.com/PepsiCo+bets+big+on+Russia%3B+Soft+U.S.+sales+spur+$1+billion+plan%3B...-a0203202556 Ferre James, Emerging markets help PepsiCo offset North American weakness, http://www.ausfoodnews.com.au/2009/07/ 23/emerging-markets-help-pepsico-offset-north-american-weakness.html, July 23 rd 2009 PepsiCo Operations in Russia, http://www.pepsijobs.com/Global-Sites/Russia/Operations.html

24

25

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many local variants of its top food and beverage brands such as Lays Shashlyk, Twistos Snacks, etc. PepsiCo strengthened its non-carbonated beverage segment by acquiring the leading Russian juice company JSC Lebedyansky in 2008 for about $2 billion and became the largest juice company in Russia. With this acquisition, PepsiCo was able to expand its non-carbonated beverage business in the country. Mike White (White), chairman and CEO, PI described JSC Lebedyansky as, Theyve done a really good job in positioning brands in each segment. They have a premium brand in Ya, theres a fortified range called Tonus, while their mainstream product is Fruktovy Sad, which does well. And then theyve got a value offering like Privet and a nice juice drink in Frustyle. So, the company has a full range that has been very well-established with the Russian consumer. 26 Besides acquiring JSC Lebedyansky the largest acquisition in the history of PepsiCo in Russia it even plans to make some significant investments in the country continuing the trend of seeking growth from emerging markets. PepsiCo along with its bottling partner PepsiCo Bottling Group (PBG) planned to invest about $1 billion for 3 years since 2009.27 Nooyi observes, This investment reflects very clearly our great confidence in Russia and our long-term commitment to this very important market.28 The investments would be for the business expansion of both PepsiCo and PBG. In 2009, the company opened its largest bottling plant, at Domodedovo in Russia. PepsiCo is also planning to open a snack plant in the country at Azov to produce PepsiCos food products considering the local consumer. PepsiCo planned to make significant investments not only in Russia, but also in China, another key growth market of the company. Nooyi described, China represents our single largest opportunity today outside the U.S. Its going to remain that way and will extend that lead. 29 PepsiCo started its operations in China in 1985 and since then the company had been focusing on expansion of its manufacturing and R&D facilities in the country. In November 2008, PepsiCo planned to invest about $1 billion over 4 years to expand its manufacturing capability, R&D, distribution, etc.30 The investment was also an effort to compete with the expansion of its rival company Coca-Cola (with an investment of $2 billion over 3 years). Though Chinese consumers preferred carbonated brands of Pepsi and Coca-Cola, they have also started favouring non-carbonated, natural juice drinks like their US counterparts. PepsiCo has expanded its non-carbonated juice segment in China and is developing new juice drinks through local R&D. The company uses part of its investment in developing tailored products for Chinese consumers using traditional Chinese medicine as its ingredients. For instance, introduction of a drink with dates and wolfberries, another with chrysanthemums extracts and Tropicana GuoBinFen (mixed juice drink). In foods, the company had introduced cheeseless Cheetos, Lays in Cool Blueberry flavour, etc. Besides concentrating on local innovations, PepsiCo has been successfully implementing its
26

Wehring Olly, The just-drinks interview PepsiCo International, http://www.just-drinks.com/article.aspx?id=93484&lk=s, April 8th 2008 Pepsi investing $1 billion more in Russia, http://www.msnbc.msn.com/id/31764701, July 6 th 2009 Ibid. Einhorn Bruce, Pepsis Indira Nooyi Focuses on China, http://www.businessweek.com/globalbiz/content/jul2009/ gb2009072_206417.htm, July 2 nd 2009 Ibid.

27 28 29

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sustainable efforts of resource conservation in the country. For instance, PepsiCo grows potatoes locally through pivot and drip irrigation systems reducing 50% of water consumption for irrigation to be less vulnerable to the fluctuating commodity prices.31 The company not only concentrates on BRIC nations but also occupies outstanding position in other countries such as South Africa, Thailand, Egypt, etc., fuelling its growth. White said, Our emerging markets portfolio continues to be a huge growth engine for PepsiCo, and has been for the last several years. We have a pretty diversified set of emerging markets - it isnt just the BRICs. Weve got some outstanding positions in countries like Argentina, Turkey, South Africa, Ukraine, Poland, Vietnam, Thailand, Egypt and Pakistan. So, it isnt just the big ones. In all of those markets, our goal is to continue to broaden our beverage footprint into healthier offerings, and to continue to explode per capita consumption.32

PepsiCo in India
Though PepsiCo operates in about 200 countries, its Indian unit, PepsiCo India has made a mark in its international growth. PepsiCo entered India in 1989 and has grown to be the largest food and beverage company in the country. India, with its diverse population base and strong economic growth, has always been an essential market for PepsiCo providing numerous growth opportunities to the company. PepsiCo has built an expansive beverage, snack and exports business in the country supported by its 41 bottling plants (of which 13 are company-owned and 28 are franchised). 33 The company snack division Frito Lay India has three state-of-art food plants, located in Punjab, Maharashtra and West Bengal.34 PepsiCo has grown its business through continuous investments for expansion and R&D in the country. It has invested about $1 billion since its inception along with its partners and has become one of the largest multinational investors in the country.35 The investments are mainly for expanding its capacity, sales and distribution, research and developing innovative products, etc. The company has a broad portfolio of brands in its food and beverages division to suit the different needs of the Indian consumers (Exhibit IV). With its expanded operations in India, the company reported revenues of INR 5,200 crore in 2008 of which 37% is from its food business.36

31 32

PepsiCo 2008 Annual Report, op.cit., page 40 Wehring Olly, The just-drinks interview - PepsiCo International, part two, http://www.just-drinks.com/article.aspx?id=93573, April 17th 2008 Our Corporate Profile, http://www.pepsiindia.co.in/Company/ourcorporateprofile.aspx Ibid. Ibid. How India is changing PepsiCo, op.cit.

33 34 35 36

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Exhibit IV PepsiCos Food and Beverage Brands in India

Foods Beverages

Lays, Cheetos, Uncle Chipps, Kurkure (launched in 1999), Lehar Namkeen, Quaker Oats, Aliva (introduced in 2009)

Pepsi, 7 UP, Nimbooz, Mirinda and Mountain Dew, Diet Pepsi (low calorie options), Aquafina (drinking water), Gatorade (isotonic sports drinks), Tropicana100% fruit juices and juice based drinks Tropicana Nectars, Tropicana Twister and Slice. Local Brands : Lehar Evervess Soda, Dukes Lemonade and Mangola.

Source: Our Corporate Profile, http://www.pepsiindia.co.in/Company/ourcorporateprofile.aspx

During 20002009, PepsiCo expanded its Exhibit V non-carbonated beverage segment and food PepsiCo Indias Revenue Segments in 2000 and 2009 business. In 2009, it earned 45% of its revenues from its carbonated beverages. It expanded Non-carbonated Drinks 18% Non-carbonated Drinks 4% its food business and its contribution to revenues Food 14% increased from 14% in 2000 to 37% in 2009 while non-carbonated drinks garnered 18% of Carbonated revenues in 2009 (Exhibit V). The year 2009 Soft Drinks Carbonated 45% has been a year of rapid growth for PepsiCo Soft Drinks India registering the highest volume growth in 82% a decade. It achieved a 32% volume growth Food 37% in its beverages division in 2009 topping the 2000 2009 AMEA regions growth rate.37 With this Source: Pande Shamni, How India is changing PepsiCo, Business Today , January 24th growth, the Indian unit became the top priority 2010, page 43 to PepsiCo, placing the beverage and snack business in India among the top five and the third largest business of the company, respectively.38
37

PepsiCo India clocks highest volume growth in a decade, http://economictimes.indiatimes.com/news/news-by-industry/ cons-products/food/PepsiCo-India-clocks-highest-volume-growth-in-a-decade/articleshow/5562401.cms, February 12 th 2010 Kamath Vinay and Challapalli Sravanthi, A banner year for Pepsi, http://www.thehindubusinessline.com/catalyst/2009/07/ 02/stories/2009070250020100.htm, July 2 nd 2009

38

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In the Indian carbonated drinks market of about INR 8,000 crore, PepsiCo shares 38% of the market whereas in juices it occupies 30% of the INR 3,000 crore market.39 In food business, PepsiCo dominates both the Western salties (wafers, tortilla chips) and traditional namkeen (salted snacks) (bhujias, mixtures) segments of Indian foods. In Western salties, it dominates withits Frito-Laybrands such as Lays, Cheetos, Kurkure, etc., whereas Lehar dominates the namkeens market (Exhibit VI).

Exhibit VI PepsiCo Indias Share in Indian Snack Business in 2009 (%)

Western Salties
Others 14.1 Haldirams 5.1 Parle 2.7 ITC 9.1 Frito-Lay 57.5 Balaji 11.5 Haldirams25 Balaji 10.4 ITC 4.6

Traditional Namkeens
Others 28 Lehar 32

Source: Pande Shamni, How India is changing PepsiCo, Business Today , January 24th 2010, page 45

To match the trajectory growth, the company has increased its investments in India for the year 2009 from $110 million to $220 million.40 For the investments, major priority would be for increasing its bottling capacity and market place infrastructure, followed by innovation and R&D and sustainability projects. Sanjeev Chadha (Chadha), chairman, PepsiCo India, enthusiastically said, We feel extremely positive about the long term growth potential of our country, and PepsiCo is committed to being a model development partner for India.41

Kurkure
One of the successful innovations of the company is the launch of Kurkure (crunchy) snack by Frito-Lay India in 1999. Kurkure is the Cheetos-like snack of PepsiCo adapted to local tastes and created to bridge the gap between the Indian namkeens (salted snacks) and Western potato chips. Kurkure was made available in various regional and local flavours suiting Indian tastes and helped the company to win the hearts of the Indian consumers. For instance, pan-Indian flavours Masala Munch and Red Chili Chatka, local specialties Tamatar Hyderabadi Style and Green Chutney Rajasthani Style, etc. Kurkure within a short span of time started dominating the Indian snack market. Few industry analysts observed, Flavor innovations, affordable price points and an excellent customer connect through a 360 degree communication approach has helped the brand enjoy iconic brand salience in the snacks category.42 Viewing the success of Kurkure, ITC launched Bingo in 2007 with Indian flavours such as Tandoori Paneer Tikka, Chatkila Nimbu Achaar, etc., and was successful through its strong distribution network
39 40

Pande Shamni, How India is changing PepsiCo , Business Today , January 24th 2010, page 45 Pepsi to double India investment this year, http://www.blonnet.com/2009/06/02/stories/2009060252040500.htm, June 2nd 2009 PepsiCo India clocks highest volume growth in a decade, op.cit. Khicha Preeti, Kurkure crunch time, http://www.brandchannel.com/features_profile.asp?pr_id=379, March 24 th 2008

41 42

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and brand visibility. To outdo the competition, Frito-Lay launched variants of Kurkure such as Risky Chilli and Electric Nimbu (lemon), etc. Deepika Warrier, marketing director, PepsiCo India, commented, Bingos success has mirrored [Kurkures] strategy of developing locally relevant flavor.43 She feels that though there is competition, the launch of Bingo has only helped the snack food category to grow and is confident that Kurkures innovation will allow it to dominate the category. With new flavours, use of natural ingredients and effective promotions Kurkure has become a blockbuster success, with sales registering upto INR 700 crore in 2009.44 The company experimented with unconventional methods to campaign its Kurkure brand such as Chala Change ka Chakkar (the cycle of change has begun) (an umbrella campaign for Frito-Lay brands) where the chosen consumers are allowed to spend a day in Bollywood actors style like Juhi Chawla or Saif Ali Khan. Another campaign was Kurkure Chai Time Achievers Award, which required families to submit recipes made with Kurkure and the winning familys photograph would be printed on about 1 million Kurkure packs.45

Aliva
Following the enormous success of Kurkure, in June 2009 Frito-Lay India launched Aliva a new, baked savoury cracker with ingredients and texture similar to biscuits and flavoured like namkeens especially to suit the Indian palate. Aliva marks a significant innovation in the companys journey of providing healthy and tasty snack inline with local consumers tastes. Gautham Mukkavilli (Mukkavilli), CEO, Frito-Lay India and president, PepsiCo India, said, We are delighted to introduce Aliva a truly Indian innovation. With Aliva we aim to replicate the success we achieved with Kurkure in a shorter time span. Aliva is yet another milestone in Frito-Lay Indias journey to transform its portfolio to address the growing consumer focus on wellness and ingredients. We will manufacture Aliva at our Ranjangaon plant where we have deployed a new state of the art baking line with Frito-Lays flavour technology.46 Aliva is available in four different flavours Special Pindi Masala, Tomato & Roasted Spices, Mint Flavor with Herbs and Original Salted using special local spices unique to different regions of the country. The promotion of Aliva revolves around the core idea of the product as Chatpate crackers with wheat and pulses.

Nimbooz
Another notable innovation of the company (in February 2009) was the launch of Nimbooz, packaged lemon juice under its beverage brand 7 UP inline with Indian consumer tastes. The product was aimed to gain the market share from the Indian branded juice market. Punita Lal, executive director (Marketing), PepsiCo India, explains, Nimbu paani is a well loved Indian drink and Nimbooz
43 44 45 46

Kurkure crunch time, op.cit. How India is changing PepsiCo, op.cit. Kurkure crunch time, op.cit. FBD: PepsiCos Frito-Lay India launched Aliva - new baked savory cracker, http://foodbizdaily.com/archive/2009/06/04/ 29955-frito-lay-india-launched-aliva.aspx, June 4 th 2009

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brings consumers this well-loved taste backed by PepsiCo quality. The total size of the Indian juice market would be around one billion cases, including the unorganised. However, the packaged branded juice market would be very insignificant. Our focus would be to drive the market as well as gain momentum of our growth with the launch of this product.47 The response received by Nimbooz was beyond the expectations of the company, making it the innovation of the year. The company had used innovative technology to provide a longer shelf life to the product. In this regard, Chadha described, This (pointing to Nimbooz) looks similar to any bottle of soft drink but the fact is its 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 Indias diverse and wide geography, its important to have a stable, safe and hygienic product. 48 Nimbooz became the most sought after drink in just few months of its launch and faced supply shortage. It is available in three different packs 200ml returnable glass bottles, PET and tetra packs. The 350ml and 200ml PET are priced at INR 10 and INR 15 respectively. They were sold in about 77 cities across the country and almost 30% supply shortage was reported in these cities. 49 Alpana Titus, executive vice-president, PepsiCo India, communicated, We are delighted by the excellent consumer response to the Nimbooz launch, which has been better than anticipated. We will do our most to meet consumer expectation by ensuring availability across markets. 50

PepsiCo India: Other Innovations

Besides launching innovative products, it also developed innovative production and distribution process in India. The company continuously researched on the new flavours and developed variants of its products in its in-house R&D units. For instance, the latest Lime and Masala Masti flavour of Lays. T.S.R. Murali, executive director (Technology), PepsiCo India, explains about his teams job as, The challenge is to offer a combination of popular familiar taste in an innovative, healthy manner.51 It even streamlined its production lines in most cost-effective ways. For instance, PepsiCo India adopted the biscuit baking style of Reading Bakery System (biscuit baking brand) and gained the flexibility of adding any flavour to any baked base. Mukkavilli explains, Typically, manufacturers tend to add the flavours and seasoning with the dough, but ours seeks to add this to the product in its final stages.52 PepsiCo also achieved breakthrough innovations in crop cultivation and energy conservation as a part of its sustainable vision of a better tomorrow. It is the largest corporate cultivator in the country cultivating potatoes, tomatoes, chillies, peanuts and oats. PepsiCo with its potatoes contract farming, deals with about 150,000 tonnes of potatoes valued at about INR 200 crore annually.53 PepsiCo India
47

Kak Sumeet, PepsiCo launches lemon juice, Nimbooz, http://www.topnews.in/pepsico-launches-lemon-juice-nimbooz2133802, February 3 rd 2009 A banner year for Pepsi, op.cit. Maji Jayashree, Nimbooz faces supply squeeze, http://www.mydigitalfc.com/companies/nimbooz-faces-supply-squeeze362, May 5th 2009 Ibid. How India is changing PepsiCo, op.cit. Ibid. Ibid.

48 49

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saves about 30% of water used for rice farming by developing technology known as direct seeding, which eliminates the requirement of holding water for paddy cultivation. PepsiCo even uses energy for its production plants from renewable sources such as bio-mass and wind turbines accounting to two-fifths of its energy consumption. Chadha comments, These are breakthroughs and nowhere else has the organisation managed to turn water positive, the way it has done in India.54 These initiatives helped PepsiCo to build its potatoes sourcing capacity at 80% less cost and of same quality as compared to the western countries.55 PepsiCo, continuing its efforts of providing healthy food to its Indian customers, introduced Quaker Oats brands and marketed it as a product useful for cholesterol reduction. It started using rice bran oil in its products to reduce the fat content. Mukkavilli notes, Were the only ones in the industry to have actually made the move to rice bran oil from palmolein, though its slightly more expensive, its reflective of our commitment to make the portfolio transformation and we communicated it on the platform of Snack Smart. With Cheetos Whoosh, we did a combination of things, not only rice bran, but the oil slurry in which snacks were put through for the outer seasoning coating was reduced, so theres less fat; its also made of half a serving of whole grain and half a serving of vegetables.56 The new products developed by PepsiCo in India were expanded to other developed and emerging countries. Kurkures blockbuster success in India has encouraged PepsiCo to share its manufacturing technology and launch it in other countries such as UK, US, West Asia, etc. The brand, in its 10 years of operation has carved a special place for itself in the Indian snack market, which would be hard to replicate not only by the competitors but also by the company itself. Purnendu Kumar, senior analyst, Technopak India, opines, Kurkure is a classic example of exemplary product innovation and a good marketing strategy. The purely Indian outlook and taste has helped it make a mark on the minds of the consumer.57 Since past few years, companies in the global foods industry are offering customised products(with locally relevant tastes, flavours and ingredients) to the local/regional consumers, but it is rare to see these customised and locally developed (in their regional labs) products been taken to other markets especially, developed countries. Chadha called this phenomenon, The shifting centre of the universe.58 Seeing PepsiCos regional brand Kurkure rapidly heading towards the West Asian markets, Mukkavilli comments, There has been interest in the Pepsi eco-system for local variants of Kurkure from South Africa to the United Kingdom. 59 While the company has already launched Kurkure at few Indian grocery stores in the US and UK, its large scale launch is on the agenda. Nooyi observed, Kurkure will retain its basic Indian flavour [in its overseas journey], but will be tweaked a bit [in areas like seasonings] to suit the palate of international consumers. 60
54 55 56 57 58 59 60

How India is changing PepsiCo, op.cit. Ibid. A banner year for Pepsi, op.cit. Joshi Shahana, Kurkure Set to go Abroad, Business Standard, February 1st 2010, page 14 How India is changing PepsiCo, op.cit. Ibid. Kurkure crunch time, op.cit.

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Not only Kurkure, the company is also using the idea and technology of its newly launched Nimbooz (February 2009), a packaged lemonade from India to launch a drink in Egypt. The product has no artificial flavours and fizz (an effervescent beverage usually alcoholic) and has longer shelf life. Abdul Latif (Latif), CEO, PepsiCo for AMEA region details, We have already used the idea and technology of the product from India to launch Mirinda Karkedeh in Egypt which is a hibiscus-based drink.61 Besides Egypt, other areas under AMEA region are also planning to launch local variants of Nimbooz. Besides products, PepsiCo India has been providing solutions for cultivation, conservation and distribution issues and being benchmarked for their cost effectiveness. The company uses the technology of direct seeding from India in other markets such as China, Brazil, etc. PepsiCo, which earlier followed traditional bottler model of distribution, has moved to third party distribution62 model (similar to Hindustan Unilever) since it set up its operations in India. PepsiCo introduced this distribution model in other Asian countries and implemented the same structure in Vietnam (in 1998). Beside these, the IT sales platform of PepsiCo India, boosting sales of the unit, is being adopted by other Asian markets. PepsiCo India with its innovative solutions allows other regions to benchmark their performance with it. Latif justifies, We tend to normalise costs and benchmark them against Indias P&L (profit and loss account). It has among the best cost efficiencies and there are many innovative solutions at every step of the manufacturing process to improve productivity and efficiency. 63 For all its innovations, Nooyi calls the Indian unit as our biggest learning lab64 and market for huge opportunities. Nooyi believes in allowing regions a free will to create, acquire and launch new brands and seeking solution, which is a most often observed problem in MNCs, i.e., their inability to take risk. Nooyi expressed, Though I have lived outside the country for many decades, but still if Pepsi India does well, I look good. It is critically important to me.65 Whereas Chadha believes An Indian born CEO is a double-edged sword Indra Nooyi is passionate about India, committed to India and understands India. So, we are fortunate to have a global CEO who understands India. Its a double-edged sword as her expectations from her home country are higher. Its like having a parent who loves you but expects the world from you.66

Emerging Markets as Innovation Centres for Reverse Innovation

India, being an emerging market is an innovation hub not only for PepsiCo but also for other global and domestic companies. India along with its emerging peers such as Brazil, Russia and China are becoming innovation centres, besides providing huge growth opportunities. The emerging markets have become tremendous growth engines for most of the MNCs not only for their lower operational costs but also for their rapidly growing middle class that are driving growth.
61 62

How India is changing PepsiCo, op.cit Third party distribution is the distribution of products using the services of third parties such as small distributors to increase the reach of the consumers by the company. How India is changing PepsiCo, op.cit. Ibid. India is Going to be Our Biggest Learning Lab, op.cit. A banner year for Pepsi, op.cit.

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In the past few years emerging markets of India, Russia, Brazil and China have emerged as new mass markets of the world. They together generate about half of the global GDP and more than 40% of the world exports.67 Even their customers are fundamentally different from developed countries with contrast per capita incomes. For instance, the average per capita income of US is $44,000 whereas for India it is $1,000.68 They are turning to be essential markets to global companies for their future growth. Earlier, through globalisation, the MNCs prospered by turning their innovative products and services to the emerging markets at lower price. Through which the companies would be able to target only the wealthiest segment (top of the pyramid) which constitutes just 10% of the total population. Later, the companies such as Microsoft, Nokia, Procter & Gamble (P&G), etc., started developing products and services as per the needs of the emerging markets rather than offering the global products to target the real potential markets consisting 90% of population. However, the biggest opportunity for MNCs is to focus on the vast segments of underserved in emerging countries. This opportunity could be better utilised through innovations providing sustainable solutions. For instance, identifying the need for lighting in the areas which are without electricity in Africa, Philips Electronics (Philips) developed a low cost solar powered lighting such as Philips Solar Uday lantern, LED torch or flashlight, etc., which are cheaper than kerosene lamps. The innovations developed for emerging markets are being repacked for sale in rich nations when required, for instance, during economic recession. In 2008, GE innovated MAC 400, an ECG machine targeted towards rural India costing about $1,000 (INR 50,000) which is just a fraction of cost of premium machines sold in US.69 Though GE sells about 34% of the ECG machines (big size) used in US, it found new applications for the low-priced ECG machines in the country. GE launched the upgraded version of MAC 400 as MAC 800 in US for new medical professionals primary-care doctors, rural clinics, etc., and created new applications in accidents sites and emergency rooms. 70 MNCs are thus exploring and serving the un-served markets in their home countries by trickling in innovations from the emerging countries. The innovations from the emerging markets are also helping the companies in bringing down their product development costs in developed worlds. For instance, GEs introduction of MAC 800 in US had reduced its development costs to $225,000 from $2 million and even reduced its launch time by few months.71 John Rice, vice chairman and CEO, GE Technology Infrastructure group, comments, Often, the trap is thinking that innovation is about making the next iPod or BlackBerry. But maybe its a simpler, lower-cost version of those. The innovation in all of our businesses now is bringing costs down.72
67

Govindarajan Vijay, The Case for Reverse Innovation Now, http://www.businessweek.com/innovate/content/oct2009/ id20091026_724658.htm, October 26 th 2009, page 2 Ibid. Kaul Vivek, Reverse innovation isnt optional. It is oxygen, http://www.dnaindia.com/money/interview_reverse-innovationisn-t-optional-it-is-oxygen_1293850, September 30 th 2009 Jana Reena, Innovation Trickles in a New Direction, http://www.businessweek.com/magazine/content/09_12/ b4124038287365.htm, March 11 th 2009 Ibid. Ibid.

68 69

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Though the low-cost offering from the low-cost regions may hurt the margins of the company, the key is the product needs of targeted developed markets. For instance, Philips has held off introduction of solar lighting designed for Ghana throughout the developed market with the fear of losing margins of its existing product lines. Gerard J. Kleisterlee, CEO, Philips, opines, Hurting margins if you go too far down.73 The companies should understand what is required by the developed world, while introducing products in the country. When launching a product to the developed world, the quality of the product is equally important as the price. Besides GE and Philips, several other companies are introducing products in developed worlds using innovations from developing countries. Nokia, after learning how people in Ghana and Morocco use and share handsets to listen to conversations, used it to launch 5800 Express phones in US enabling users to share MP3 music and YouTube videos.74 Another global player P&G, who created honey-based Vicks Honey Cough syrup for Mexico, had found market for its product in US and Western Europe. Nestles dried noodles brand Maggi created for India and Pakistan, is being sold as a budget health food for its low-fat in Australia and New Zealand. Another domestic-grown international company Tata Motors in 2009 had launched Tata Nano, peoples car for $2,000 (INR 1 lakh) targeted towards people owning two-wheelers in India.75 Tata Motors is planning to take Nano to Africa, Europe and US, which is likely to pose threat to US automobiles. To be successful in the long-run, companies need to trade-off the challenges in their ways. The possible challenge is to retain the emerging-world prices and win over consumers of developed world, who are spoiled by abundant options it requires balance between price and performance.

73 74

Innovation Trickles in a New Direction, op.cit. Sarkar Christian, Reverse Innovation An Interview with Vijay Govindarajan, http://www.emorymi.com/ reverseinnovation.shtml Ibid.

75

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Annexure I PepsiCos Revenue Distribution from 1970 to 2008 (in $ billion)

Year Total Sales North America (US and Canada) Total 1970 1979 1985 1986 1989 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1 5 7.5 10 15.4 17.984 19.067 20.337 20.917 22.348 (including 0.722 of Tropicana) 20.367 (2.25 of Tropicana 2.12 PBG) 20.438 (2.43 of Tropicana) 23.512 25.112 26.971 29.261 32.562 35.137 39.474 43.251 12.498 13.358 14.416 14.866 15.740 10.470 11.851 16.008 17.363 18.293 19.399 21.186 22.975 24.536 25.346 5.486 5.709 5.921 6.051 5.886 5.521 6.745 7.504 7.749 8.678 9.862 11.376 12.162 14.938 17.905 International Latin America Europe 3.972 4.872 5.895 4.750 5.492 6.435 Asia, Middle East and Africa 3.440 4.574 5.575

Compiled by the authors from the Annual Reports of the Company

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Annexure II Major Brands of PepsiCo

Food Beverages Global Lays Potato Chips, Doritos Tortilla Chips, Quaker Foods and Snacks, Cheetos Cheese Flavoured Snacks, Ruffles Potato Chips, Tostitos Tortilla Chips, Walkers Potato Crisps, Fritos Corn Chips. Pepsi-Cola, Mountain Dew, Gatorade (Thirst Quencher, Tiger, G2, Propel), Diet Pepsi, Tropicana Beverages, Lipton Tea (PepsiCo/ Unilever Partnership), 7UP (outside US), Aquafina Bottled Water, Mirinda, Sierra Mist.

North America a) Frito- Lay North America (FLNA) Lays Potato Chips, Doritos Tortilla Chips, Cheetos Cheese Flavored Snacks, Tostitos Tortilla Chips, Branded Dips, Fritos Corn Chips, Ruffles Potato Chips, Quaker Chewy Granola Bars, SunChips Multigrain Snacks, Rold Gold Pretzels, Santitas Tortilla Chips, Frito-Lay Nuts, Grandmas Cookies, Gamesa Cookies, Munchies Snack Mix, Funyuns Onion Flavoured Rings, Quaker Quakes Corn and Rice Snacks, Miss Vickies Potato Chips, Stacys Pita Chips, Smartfood Popcorn, Chesters Fries and Branded Crackers b) Quaker Foods North America (QFNA) Quaker Oatmeal, Aunt Jemima Mixes and Syrups, Quaker Grits, Capn Crunch Cereal, Life Cereal, Rice-A-Roni, Pasta Roni and Near East Side Dishes. Latin America Gamesa, Doritos, Cheetos, Ruffles, Sabritas and Lays. Sells many Quaker brand Cereals and Snacks Mirinda, 7UP (International), Pepsi Limn, Kas, Teem, Pepsi Max, Pepsi Light, Aquafina (FlavorSplash, Sparkling), Starbucks, Lipton Pepsi, Mountain Dew, Gatorade, 7UP (outside US), Tropicana Pure Premium, Sierra Mist, Mirinda, Tropicana Juice Drinks, Propel, Dole, Amp Energy, SoBe Lifewater, Naked Juice and Izze,Aquafina (FlavorSplash, Sparkling), Starbucks (Partnership) (Frappuccino ready-to-drink coffee, Starbucks Iced Coffee ), Lipton (Partnership)(Lipton Brisk, Lipton Iced Tea)

UK and Europe Lays, Walkers, Doritos, Cheetos, Ruffles and sells many Quaker brand Cereals and Snacks Pepsi, 7UP , Gatorade, Pepsi Max, Pepsi Raw, Tropicana and V Water, Lebedyansky (acquired Russias leading juice brands),Aquafina, Lipton Contd... 20 IPD0099

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Asia, Middle East and Africa Lays, Doritos, Cheetos, Smiths, Ruffles and Pepsi, Mirinda, 7UP and Mountain Dew, sells many Quaker brand cereals and snacks Aquafina, Lipton India Cheetos, Kurkure, Lays, Lehar Namkeen, Quaker Oats, Uncle Chipps, Aliva Pepsi, 7UP, Aquafina, Gatorade, Mountain Dew, Nimbooz, Slice, Tropicana, Tropicana Twister, Mirinda

Compiled by the authors

Annexure III Acquired Companies and Brands of PepsiCo

Year Company Acquired, Merged or Partnered 1986 Purchased 7UP International (third-largest franchise of soft drink company outside US) Acquires Mug Root Beer 1988 Partnership with Hostess Foods in Canada 1989 Acquired Walkers Crisps and Smith Crisps UKs leading snack and food companies Acquired Smartfood Brands Acquired 7UP Mug Root Beer Hostess Potato Walkers potato crisps, Walkers Square potato snacks, Walkers French Fries potato sticks, Smiths potato chips, Smiths SensationsSmartfood popcorn Gamesa cookies Lipton Brisk, Lipton Iced Tea, Lipton Pure Leaf

1990 Acquired controlling stakes in Gamesa, Mexicos largest cookie company 1991 Acquired equity interest in Wedel SA, leading manufacturer of chocolate and confectionary in Poland Snacks Joint venture with Thomas J. Lipton. 1992 Frito-Lay merged with General Mills 1994 Partnership with Starbucks

Snack food business in Europe Frappuccino ready-to-drink coffee, Starbucks Doubleshot, Starbucks Doubleshot Energy, Starbucks Iced Coffee Cracker Jack candy coated popcorn Tropicana Pure Premium juices, Tropicana Twister juice drinks, Contd...

1997 Frito-Lay buys Cracker Jack, the 104-year-old snack from Borden Foods Corp. 1998 Acquired Tropicana Products from Seagram Company Ltd.

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Frito-Lay purchased Smiths Snackfood Company in Australia from United Biscuits Holdings, Inc. Frito-Lay joint venture with Empreseas Polar SA of Venezuela Frito-Lay acquired Barcel, Chiles second-largest snack company Frito-Lay acquired an expanded stake in Tasty Foods Egypt Tropicana Products acquired Alimentos del Valle S.A., Spains chilled juice and soup company. 2000 Tropicana Products joint venture with Galaxy Foods Co. Acquired majority stake in South Beach Beverages Company Merger with Quaker Oats Company

Tropicana Pure Tropics juices, Smiths Snackfood Frito-Lay became the snack chip leader in South and Central America

Tropicana Smoothies SoBe juice drinks, dairy and teas SoBe Lean diet juice drinks, dairy and teas, SoBe Life Water, SoBe Adrenaline RushQuaker Oatmeal, Quaker Squares cereal, Quisp cereal, Quaker rice snacks (Quakes), Rice-A-Roni side dishes, Pasta Roni side dishes , Near East side dishes, Puffed Wheat, Harvest Crunch cereal, etc. IZZE Naked Juice (under Tropicana products)

2001 Acquired Tasali Foods, Saudi Arabias snack company 2006 Acquired IZZE beverage company Acquired Naked Juice Company Acquired Bluebird Foods, New Zealands snack company 2007 Acquired Sandora, Ukraine juice company 2008 Acquired Spitz International, Canadas leading maker of sunflower and pumpkin seeds Bought Bulgarias Leading Nuts and Seeds Company Bought Lebedyansky, Russian juice leader Acquired UK Vitamin Water brandV Water 2009 In joint ventures with Almarai acquires stake in Jordanian dairy company, Teeba Merger with Pepsi Bottling Group and PepsiAmericas Acquired Amacoco, Brazils largest coconut water company Acquired Karinto snack business in Peru.
Compiled by the authors

LebedyanskyV Water

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