PEPSI TRIGGERS DEVELOPMENT

Tanvi Rana
Neha Yadav
Anupam Mukherjee
Sahil Bedi
Subhankar Nanda
Utsav Jain
introduction
•Agri-business has become the major source
of profitability for PEPSI to meet its export
obligations
•2nd largest MNC exporter in India and has
booked the fastest growth in terms of export
turnover
•It earns around Rs.2750 mn by way of
exports
under agri-exports
•Dealing with agro-products
 CONT….

•Mass employment, directly & indirectly

•Pepsi’s corporate philosophy -
–Create industrial base through capital &
technology investment
–Generate employment
–Earn foreign exchange through exports
History
 Reasons for entering in India
 US Market at its saturation level

 Vast population of India lured MNCs to enter India

 Urbanization familiarized Indians with global brands

 Hindrances
 Late 1980s, high Government intervention

 Low per capita consumption of soft drinks

1 Proposal
st

 In May 1985, along with the R P Goenka (RPG) group, to begin

operations in the country.

 Planned to import the cola concentrate and sell soft drinks under the

Pepsi label.

 PepsiCo's entry into India revolved around promoting and developing the

export of Indian agro-based products .

 Reason of rejection
 The government did not accept the clause regarding the import of the cola

concentrate.

 The use of a foreign brand name (Pepsi) was not allowed as per the

regulatory framework.

Pepsi come up with new proposal with commitment of

 Agricultural revolution

 To create many employment opportunities

 That would tempt many of the terrorists to return to society ...

 Promises That Helped Pepsi Enter
 The company would focus on food and agro-processing

 Only 25% of the investment would be directed towards the soft drink

business

 The company would bring advanced food processing technology to India

 Provide a boost to the image of products made in India in foreign market

 Foreign brand name would not be used

 Establishment of an Agricultural Research Centre

 Half of the production would be export and the export–import ratio would

be 5:1 for the period of 10 years (80% of the exports to be of food

products manufactures by the company and 20% of the exports to be of
food products by another companies)
 Creation of jobs for 50000 people across the nation, of which 25000 were

be in Punjab
 Pepsi's Promises - Keep Some, Break
Some!
 By 1991 it had employed only 783 as direct employees, but by 1992, this

figure increased to 909 and by 1996 it rose 2400

 Pepsi also failed to adhere to its commitment to export 50% of its

production

 Its exports to fruit/vegetable based products was negligible

 It began exporting tea, rice, shrimps, leather products, champagne as

against fruit/vegetable products

 Pepsi Goes Farming - Finally
 Pepsi's tomato farming project was primarily responsible for increasing India's

tomato production

 Production increased from 15 tones per hectare to 50 tones per hectare due to

the use of high yield seeds

 Pepsi offered its contract farmers advanced equipment such as transplanters

and seeding machines to help them carry out their task efficiently and

effectively

 More then 1700 farmers in about 5 Punjab districts have planted Pepsi chilies

 Average chili yield was 5 tones per hectare.

Conti…..
 India’s productivity was very low as compared to china in peanuts

 Production increased from 4 quintals per annum to 15 quintals

 In late 1990, the company finally met its commitment to set up agro research

centers in Punjab and Karnataka

 Agri - program had been successful because of its unique laboratory-farm-

factory approach

 Company remains in constant touch with farmers providing them with

technology and implement, advised them on farm management practices

 QUESTIONS

Q1. What is the rationale behind the agri-initiative of Pepsi? Is it consistent with its
objectives and philosophy?

A. Reasons behind the agri-initiative of Pepsi:

• The Govt rules and regulations

• To set-up the Soft drink business

Yes, it is consistent with the objectives and philosophies

• Capital and technology investment

• Employment generation

• FOREX income through Exports

Q2. Explain Pepsi’s style of management and approach to farming practices?

A. Pepsi followed Paternalistic Style of Management

Approach to farming practices:

• Intensive Research & Development

• Adoption of Modern Techniques of Farming

• Development of Farmers

• Farm Management Practices

Q3. Can other companies emulate Pepsi’s practices? Can it be improved?

A. Yes, other companies can emulate Pepsi’s practices;

• Research & Development

• Import of Seeds and Fertilizers

• Contract Farming

Yes, it can be improved in all aspects and mainly in R & D

THANK YOU