biac final deck

Disclaimer for Become Indra’s Advisors Contest

• This presentation (‘Presentation’) has been prepared by PepsiCo. India Holdings Pvt. Ltd. (‘PepsiCo.’) collectively, with any officer, director, employee, advisor or agent (‘Preparers’) for Become Indra’s Advisors Contest (‘BIAC’).

• This Presentation is exclusively for the purpose of guiding the persons registering themselves for participating in BIAC (‘Participants’) and no commercial purpose is intended.

• This Presentation and the information, data, figures, pictures, projections, estimates, forecasts, analyses etc. (‘Contents’) contained herein are confidential and shall strictly be used for the purposes of BIAC and shall not be reproduced, copied, disseminated or distributed in any manner.

• While the information contained in this Presentation is believed to be accurate, the Preparers expressly disclaim any and all

liability for representations or warranties, expressed or implied, contained in, or for omissions from, this Presentation or any other written or oral communication transmitted to any Participant in connection with this Presentation so far as is permitted by law.

• Neither the Preparers nor any of their respective representatives shall be liable for any direct, indirect or consequential l oss or damages suffered by any Participant or any person as a result of relying on any statement in or omission from this Presentation, along with other information furnished in connection therewith, and any such liability is expressly disclaimed.

• In furnishing this Presentation, the Preparers reserve the right to amend or replace this Presentation at any time and undertake no obligation to update any of the information contained in the Presentation or to correct any inaccuracies that may become apparent.

• This Presentation shall remain the property of PepsiCo and the Participants shall promptly delete all the Contents received i n written, electronic or other tangible form whatsoever after their participation in BIAC is completed. Such deletion shall be certified to PepsiCo by the Participants via email to the following email address: [email protected]

• All trademarks as depicted in the Presentation remain property of their respective owners, and are used only to describe the products being provided under such trademarks. The depiction in no way indicates any relationship between PepsiCo and the owners of said trademarks in any manner whatsoever.

• Neither the dissemination of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Preparers or any of their respective affiliates to enter any contract or otherwise create any legally binding obligation or commitment. The Preparers expressly reserve the right, in their absolute discretion, without prior notice and

without any liability to any recipient to terminate discussions with any recipient or any other parties .

PepsiCo Confidential 2

Ghar ke Baahar bhi

Maximizing Out of Home Eating & Drinking Opportunities for PepsiCo

As the year draws to a close, there is much excitement in the PepsiCo office. It is that time of year when plans are made for the next year, and senior leaders in the company are making choices – where should we resource ahead of the curve?

India is an exciting market, and has always been a key focus area for PepsiCo. Among the many exciting opportunities present, one of those that is being discussed more often these days is the exciting out of home arena.

Globally a huge business, this is now finally taking shape in India too. The buzz around this is evident, as seen by the number of people consuming some beverage or snack while out on the streets or restaurants and malls!. Clearly, there is something here that merits serious attention and resourcing!

Inviting India’s brightest young minds to help PepsiCo India make the most of this opportunity!

PepsiCo is waiting to hear from you!


The question you are invited to help us answer

How should PepsiCo India participate in the rapidly expanding business opportunity provided by increased out-of-home

eating and drinking?*

What is the best end-to-end business solution to monetize our brand and equipment assets, to ensure we gain on every front viz.

• Volume & Value

• Profit

• Equity

• Partnerships

*also referred to as On Premise(OP) or Foodservice (FS) within the industry


CONTENTS

1. The opportunity

2. Key insights, trends, information data-bank • Consumer

• Customer

• Pepsico

3. Best practice case studies - inspiration

4. What we expect from you

5. Appendix • About Pepsico

• Business fundamentals


1. THE OPPORTUNITY

Young On-the-Go lifestyles seek food & drink on the move

More young people on the move –

students, working women, working men populations increasing

significantly

Urbanization, personal mobility and longer commutes means

time starved people want to eat and drink

on the move

OPPORTUNITIES: Packaging

(convenience, fresh, cool etc…)

Ready to Eat Ready to Cook/Half Cooked


Cafeterias

(Workplace, Healthcare, etc.)

Restaurants

This has spurned over a trillion $ food service industry! Globally, Food Service comprises a mix of channels serving almost 50% of

FB consumption occasions,

All Out of Home Channels

Welfare & Services

Hospitals

Vending

FSR

QSR

Pubs/bars

Cafés

Takeaways Nightclubs

Hotels & lodging

Street & mobile vendors

Retail Leisure

On-board

Education

Workplace

Global FS sales (manufacturer)

40-50%

Airports & Hotels

Sports Stadiums

Recreation Parks, Movie Theaters, etc.

Education (Schools University)

QSR=Quick Service Restaurant; FSR=Full Service Restaurant; FB= Food & Beverage


Business and Institutions

Travel & Lodging Entertainment Eateries & Dining

In India, too the Food Service footprint is large, varied & growing

Cafes & Bars

FSR

QSR

Kiosks & Food courts

College/Univ.

Workplace

Govt & Military

Catering & Social Services

Hotels

Travel

Clubs/Bars

Theme Parks

Cinemas


A platform to build both revenue and brand equity

Large and Growing Volume Growing faster than retail since the

last 3 years in India, and globally too

Drives Beverage & Snack Adoption

Compared to home, consumption of specialty beverages are higher and consumption of snacks as a

meal replacement are higher

Unique Access to tough-to-reach consumers

Has higher per capita trips than retail among a core target – youth,

working men, upper SECs

Drives Brand visibility and equity

Allows controlled quality brand activations in the “right” mood and

environment

SEC= Socio Economic Classification


In India, PepsiCo’s On Premise Sales have had a great run over the last 5 years…

Volume Growth Hi Double Digit

CAGR

Share Growth

Urban Advantage >10% Volume Mix &

Growing!

Regular Brand

Activations

ON PREMISE CHANNEL LEADERS


QSRs and T&L most important channels for beverages today… and tomorrow!

Contribution

2012

43%

10%

4%

21%

10%

11%

1% Others

QSR

FSR

Retail Café/Bar

T&L

B&I

Ent’t

The top contributors to growth 2012-2016

Tier 1 growth drivers

1. QSR

2. T&L

Next level growth drivers

1. Entertainment

QSR- Quick Service Restaurant; T&L- Travel & Lodging, B&I – Business & Institutions


Led by key accounts who will drive growth

Acceleration of growth in QSR’s

Travel & Lodging growth through new development

Rapid growth through Cinemas

Market leaders strengthening their share of T&L

Global QSR key accounts expanding rapidly

Cinemas dominated by key players

• Room nights set to double over next 5 years

• Number of multiplex screens to double by 2018

• Rapid growth in regional cities

• TAJ and ITC to contribute to significant portion of the total growth

• PVR and INOX becoming more dominant, acquiring smaller National operators

• Top 5 Global QSR’s contributes 85% of growth

• Outlet growth of 20% per annum

Source: Euromonitor


Channels provide different benefits to PepsiCo

‘13 ‘17 (MM) 8 oz - Branding +

- P

rofi

tab

ility

+

Cinemas

Hotels Vending

Railways Institutions

FSRs

XX

X

X

X

Airports

X

XX X

X

QSRs/Food Courts X

X

X

X

X

X

*size of the bubble indicates volume


And gives us new opportunities to grow for Food Service

Day Part Portfolio

FACT #1 80%+ of business from Morning & Evening

Breakfast Morning Evening Snack

FACT #2 Huge Mix of CSDs for PepsiCo

FACT #3 75% of industry sales is from foods

75% 76%

54% 73%

Grow beyond morning & evening

Grow beyond CSDs

Grow beyond beverages


Customized Pack Solutions that provide convenience, portability, and competitive pricing

An example of how we can make the most of the channel opportunity…

Differentiated portfolio based on location/occasion within Lodging channel

Breakfast

Vending Solutions

Event Catering

• Drive Quaker Breakfast meal solutions • 100% premium juice offerings

In Room

Fitness Center

Restaurant /Bar

Gift Shop Peanuts/Snacks

Lays Stax - Minis

Water - Cups

CSD 150ml Cans

Quaker Inst. Oats

Quaker Cookies

Lipton

Trop Tetra 200ml

• Represents up to 60% of total Beverage sa les

• Explore low-cost Water option • Penetrate distribution on Salty

Snacks and Quaker Cookies

• Broaden Gatorade and G-Series trial

• Introduce Premium Water brands • Development of Pepsi Hi-Image

contour bottle • Drive Mixology range – chef-led

recipes and innovation

• Introduce high end coolers to drive impulse purchase

Travel Lodging

Source: US Travel & Lodging Fact book 2012


The way to think about this opportunity: 3 Lenses Examine the WIFM* for each of the 3 key players

CONSUMER PI BRANDS/ EQUIPMENT

CUSTOMER

SWEET SPOT

Who is he? What’s his life like?

Where is he?

What is he doing there?

What is he looking for from the occasion/channel?

What is the interaction with our categories today?

What brings customer footfalls, increases revenue per customer?

What is the role of our category in their portfolio?

How do we give them a Competitive advantage?

How can we ensure best Service?

How do we build brand visibility and equity in a unique and impactful way?

How do we innovate around equipment to satisfy consumer and customer needs in a way that ensures profitability and gains us a competitive advantage?

What is the role for culinary innovation? How do we design and implement against this?

*WIFM: what’s in it for me


2. KEY INSIGHTS & TRENDS The Consumer

Global trends show high potential for India

Frequency Of Eating Out Is High In The Developed World; Translating Into Huge Potential For India

Key drivers of beverage adoption are hanging out with friends and visiting your favorite restaurant

Source – Annual visits, Foodservice - NPD/Crest June 08, Retail - IRI Panel (Q308)

Annual Per Cap Trips

Huge Eating Out potential in India

8%

8%

17%

23%

26%

Entertaining Advertising

Drinking at the Mall

Going to the Movies

Favorite Restaurant

Favorite Hangout with

Friends

Drivers of Beverage Adoption*

220

121

40 26 15 15

Total FS QSR FSR C&G/Ent Grocery Super Club

1.2

42

India Singapore

Eating Out Retail


Supported by key indicators already evident in India


Consumers are more emotionally connected here

Foodservice Retail

With Friends Spontaneous Alone Routine

Relax & connect

Savor the time 45 minutes plus

Chore

Get it done Complete in < 20 minutes

Consumer Shopper

Environment

Emotional Framework

Decision Maker


Afternoon-Evening and social gatherings are a natural affinity for LRB

WHERE – Significant In Home play but OOH is a strength ; High consumption

while relaxing

• Packaged Beverages & Soft Drinks over-index on out of home consumption 3-4 times vs. Average beverage consumption (which is mostly in home)

• Over 60% of beverages consumption happens during leisure/relaxation time

WHEN – LRB consumption mostly during non-meal occasions

• Over half of soft drinks consumption happens in the afternoon/evening (between lunch & dinner), & another 1/5th happens in the morning (between breakfast & lunch)

• But other packaged beverages have a more even consumption profile through the day

– 1/3rd in afternoon/evening

– 1/3rd at breakfast/morning

– 10-15% in mid morning

– 10-15% post dinner too


And freshly-prepared food forms the core of what these food services deliver


http://www.google.co.in/imgres?sa=X&biw=1366&bih=673&tbm=isch&tbnid=cl9JgHcxzbaAWM:&imgrefurl=http://www.qsrmagazine.com/news/subway-ranks-no-10-most-culturally-relevant-brand&docid=3lH279sZ-ngI3M&imgurl=http://www.qsrmagazine.com/sites/qsrmagazine.com/files/imagecache/storyimage/news/subway-ranks-no-10-most-culturally-relevant-brand.jpg&w=232&h=190&ei=n2-LUsKVC6Hg4QS5moH4Dg&zoom=1&ved=1t:3588,r:87,s:0,i:348&iact=rc&page=5&tbnh=152&tbnw=185&start=81&ndsp=25&tx=127&ty=73

Our core consumer for this opportunity is…

Consumers who eat and drink outside home, and are positive to our categories are more likely to be: • Male & Female

• Younger (<35 years)

• Urban, from larger town classes

• Newly-working and students

• Across all SEC groups, but those who frequent organized E&D outlets come from upper SEC


Some key insights about our core consumer

1. Relationships are changing Need to deliver shared experiences

• Nuclearization of joint families- less time for extended families, higher cost of living together in urban

• Hidden cost of nuclearization- no emotional anchors

• Friends are the new family- Fun is New Experiences with friends

• Reduced power distance with celebrities

2. Self as a Project Need to help build social & evolving identity

“I’m a Rapper, Social Media Expert, Lyricist, Musician” Harshit, Roadies Introduction




3. MONEY, TECH, BRANDS Need to deliver individual progress & success

4. Digital Native Need to provide tech solutions

MONEY is an absolute must, I will only go after something (a

profession) if there is big money in it!

It is best to buy famous brands, not only

because they are good quality but they also say something about who you are in society

Today if you were to see any graphic or poster in my room, I would have either found it online or created it

myself on either Photoshop , Picasa.. I can create things which I personally identify with and have it

with me

5. Health & Wellness: Should not compromise on taste


Health = Not-Fall-Sick & Do-My-Work

Walking Indulgence

Eating well is a way of life, Physical activity is not

‘Pleasure Foods’

Personalized consumption (in shared contexts too)

Quasi-meals growing Balanced Meals 71% Never Exercise

Energy Mental Agility Immunity

Talking Health


2. KEY INSIGHTS, TRENDS & INFO BANK The Customer

2011 2015

Channel Company Total Outlets

QSR Domino's Pizza 403 900

QSR McDonald's 255 385

QSR Papa John's 30 74

QSR Sbarro 12 40

QSR Subway 250 410

QSR KFC 123 400

FSR PH/PHD 253 500

Cafes Barista Lavazza 145 165

Cafes Whitbread/Costa Coffee 80 100

FSR Carlson/ TGIF 10 13

FSR Blue Foods/Pan India 70 150

FSR Nirulas 25 25

FSR Specialty Group/MLC 68 90

FSR BJN Group 35 42

FSR Barbeque Nation 17 20

FSR/QSR Litebite Foods 43 90

FSR Encore/Twinkle Hospitality 100 200

FSR Kebab Factory 12 20

Trends : QSRs/Fast Food chains will dominate the restaurant landscape in the years ahead


Trends: Entertainment channel – Malls, Cinemas Up

Mall Mania – Driving New Consumption Points

Cinemas - 3.7 Trips p.a. (vs <1% for other APAC countries)

#1 Entertainer For Indians

• Mall visits emerge as a key hangout activity, both during weekends and weekdays

• PVR acquisition of Cinemax makes it the largest

• Inox is in acquisition mode – Fame & CCPL Cinemas (9 Locations)

87

80

84

78

57

57

80

74

70

69

57

56

Hang out/shopped at the mall

Visited relatives/friends

Watched movies in multiplex

Been to Rest/Hotel/Cafe

Been to clubs/pubs/parties

Been on a long drive/vacation

Weekends Weekdays Source – MTV

Invest in the Investors (Cinepolis)

8851100

Screen Number

2011 2013

Helping Expansion of FS & Cinemas


Trends: Hotels also seeing high growth

Source: Euromonitor,

Room Supply in India set to grow exponentially

No of Rooms India Upcoming Supply (2010-13)

5714

18497

1835

6874

5432514

2010 2013

Upscale Midscale Economy

23185

95087114000

173000

1998/99 2008/09 2012 2017

Hotel Expansion (2012-17)

120

7 24

112

5 12 10 9 26

10 14 20 31

12

150

10 28

137

38 35 17 12

42 30 33 37

100

42

ITC Leela EIH Ltd. Taj Hyatt Marriott BharatHotels

Park Starwood Pride Accor RoyalOrchid

Carlson IHG

2012 2017

Source – HVS Research, Knight Frank Research


Customers typically want us to help their business grow in different ways…

Attract new / right consumers

Drive Occasion / Day-part / Health / Sustainability agendas

Increase ticket size with value adds

Drive productivity via operations


How do restaurants/cinemas generate sales?

Driving Revenue

Inside the Four Walls Trading Area Marketing

Trading Area

87% of business within 5 km

• 50% live there

• 37% work/ shop/go to school/cinema

Primary “traffic generators” may be different by day part

•

Restaurant

Schools Offices

Cinemas

Homes Shops


Target Audience

Tactical Techniques

Strategies

Objectives

The restaurant profit equation uses TATC to grow revenues

Restaurant Sales Equation

Increase Transaction Count (Traffic) Increase Average Check

Build Traffic Increase

Conversions Sell Larger Items

Sell More Items Per Transaction

Actions must get New Customers

Actions are targeted to Current Customers

• Grand opening

• Newspaper Ads

• Newspaper Inserts

• Direct Mailers • Anniversary/Spl Event

• KA Cross Promo

• PET Label Promo

• News: NPD Preview, etc.

• Celeb Meet & Greet

• Great Ambience

• Great Product/NPD

• Great Customer Service

• Speed of Service • Multiple Vending points

• Service On Seats

• Currency/Price-offs

• Scratch card Promo

• Great Collectibles

• Loyalty Cards (Buy 4 get 5th Free)

• Upsizing

• XL Combos

• Suggestive selling

• Crew Incentive • Staff Buttons “Go Large”

• Feature better value

• Impactful POSM

• Combos – Premiums – Special prices – Proper use of POS

• Suggestive selling

• Kids Meal Packs

• Take Away

• Family meal days/nights

• Combo Crew Incentives

Sales = TC x TA


Key challenges for customers

• Full Control over the Supply Chain

• Shortage of trained manpower & attrition

• Margin pressures accentuated by rising real estate costs

• Currently turbulent economic environment

• Differentiation


2. KEY INSIGHTS & INFO DATABANK PepsiCo Brands & Strategies

• The largest Food & Beverage combined business

• 8 Rs1000 crore+ brands: Pepsi, Lay’s, Mirinda, Kurkure, 7Up, Slice, Aquafina, Mountain Dew

• Every brand well known & loved across the country (awareness of 50%+ & distribution reach of 60%+ on most brands)

• A strong mix of globally advantaged brands that have loyal following (like Pepsi, Lay’s & Dew), as well as locally crafted lovemarks, anchored on India rituals (like Kurkure, Slices, Nimbooz)

• Strong innovation footprint & locally created brands: Slice, Kurkure, Nimbooz, Atom, Kurkure puffed snacks, Nimbooz Masala Soda

PepsiCo India owns an incredibly rich house of brands

Powerhouse of Muscular Brands


That span all consumer needs through the day

Morning Health Dose

Breakfast Nutrition

Thirst Thru The Day Sports Hydration

Mind & Body Boost

Different Tastes of Evening Refreshment

Mid-Day Indulgence

Afternoon Family Snack Through The Day Treat


Our Brands own priceless image and associations

Youth Aspiration Older Adults

Kitchen Logic Ingredients

International Flavors, Irresistible Taste

Family: Modern Twist on Tradition

Super Grain for Nourishment

and Health

Energy for today, Heart Healthy for Life



Indian Adults/ Family Snacking

Tweens

Hunger Filling, Satisfaction

Traditional Indian Namkeens

(Younger) Adults, middle class

Light & Fun Shapes & Flavours

Cheesy Mischievous Fun Joy of Sharing Bole Mere Lips...I Love

Uncle Chips



Youth: Capture the excitement of

NOW

Young Adults: Mood Uplifting

Bold Orange Taste

Electric Taste of Cola

Youth: Impulsive Uninhibited Fun

Lemon Refreshment

Young Men: Courage liquid

Mind & Body Boost



Young Adults: Sensorial Pleasure

All Adults

9 Fruit Nutrients Mango Indulgence

Young Families: Breakfast Nutrition

Quality, Purity, Taste

Sports & Active Fans

Rehydration, Sports

Achievement

Make Breakfast 100%

The Purest Part of You

Is it in you?


The PepsiCo Foodservice Philosophy

Towards that end, we believe that

• One solution doesn’t work for everyone

• Our focus is customized and based on the customer’s priorities

• We aim to set best-in-class standards in service, quality and innovation

• We use the power of shared Insights

Help our customers grow their entire business!


1. Combos

PepsiCo leverages 4 most commonly used

strategies in QSR/Cinema

2. Cup Upsize

3. Crew 4. News


Attract new/right consumers Drive Occasion/Day

part/Health/Sustainability agendas

Increase ticket size with value adds Drive productivity via operations

Utilizing fleet vehicles to drive awareness and footfalls for our customers

Some examples of how PepsiCo has partnered them…

Quaker in a cup format customized for airlines

Leveraging platforms/celebs to drive high ticket size items

Lowered cost of ingredients, packs; operational efficiencies saving labor cost…


And extended our range into various solutions

BEV

FOODs

QSR FSR Cinema

Lipton FTN Juice FTN Premium Water Premium Glass Bottle

Frozen

Mixology Asian Specialty Bev. Smoothies Premium Water Powder Teas/Juice Mixology

Breakfast Snacks Breakfast Muffins Nachos Station

Premium Snacks Nachos Muffins Cookies


2. KEY INSIGHTS & INFO DATABANK PepsiCo Equipment

PepsiCo India owns an array of equipment assets

• In both the foods and the beverages categories

• Equipment is critical to success in this space – it must match customer needs on several dimensions: – Financial

– Operational

– Space

– Imagery

– Portfolio

• Each machine may perform a different function – ranges from simply stocking to a complete creation of finished product from scratch

The next few pages explains the functions of each of these, along with some basic financials to help you understand how the business works, and devise suitable solutions either using these or better still, developing your own out-of-the-box ideas.


What is Post Mix?

• Soft drink made on location- miniature factory installed on-premise • Local water must be filtered, carbonated and blended with syrup at the location while being

dispensed.

Bag-in-Box

Syrup Pump (Gas)

Fountain Dispenser

Valve

80-85 psi

CO2

1200 psi

60 -65 psi

Carbonator Water supply

(filtered)

Pre-carbonation cooling coil

Tubing

In remote chilled systems, the syrup is chilled in a back room away from the dispenser and then pumped through the tubing into the dispenser.


The process at the PLANT

Water Treatment

CO2

Sugar

Concentrate

Post Mix

….syrup rests

Filter Bottles,

Cans, Premix

Simple Syrup

Finished Syrup

Soda Water

Carbonator


Cooler Refrigeration System Type

A

B

C

D


Functioning of Refrigeration System

• COMPRESSOR - Low temperature low pressure vapor at State A is compressed to high temperature pressure vapor at State B (SUPERHEATING PROCESS)

• CONDENSER - Vapor is condensed into high pressure vapor at State C (DE-SUPERHEATING/ HEAT REJECTION/ SUB COOLING PROCESS)

• CAPILLARY - Condensed liquid passes through expansion devise (capillary) where high temperature & pressure gets converted into low temperature & pressure

• EVAPORATOR - Vapor is throttled down to low pressure liquid & passed on to

evaporator at State D. where it absorbs heat from surroundings from circulating fluid (being refrigerated) & vaporizes into low pressure vapor at State A

• HEADER - Excess liquid coming from evaporator gets stored here which helps in reducing excessive liquid getting into compressor. Excess liquid in compressor would result in increasing load on pumping & thereby failure of Compressor

• FILTER DRIER - Moisture is absorbed from Refrigerant


Bunn Machine

Counter Top Cooler

Beverages Equipments

Cost Rs 2.85 Lakh

Maintenance Cost Rs 8000/Annum One Trip/Month

Water Connection Yes

No. of Valves 2

Input Ingredients Water, Concentrate

Output Product Frozen Slush

Dimensions (cm) 80 (H) X 40 (W) X 62 (D)

Hurdle rate 35 glasses/day

Cost Rs 10,000

Maintenance Cost Rs 300/Annum

Water Connection No

No. of Valves NA

Input Ingredients NA

Output Product NA


Capacity 70 Litres (42 Bottles of 300ml)

Hurdle rate 100cases/year


Visi Cooler

Double Door Visi Cooler


Cost Rs 35,000


Water Connection No

No. of Valves NA


Output Product NA

Dimensions (cm) 200 (H) X 64 (W) X 72(D)


Hurdle rate 700 cases*/year

Cost Rs 55,000


Water Connection No

No. of Valves NA


Output Product NA



Hurdle Rate 1500 cases/year

PepsiCo Confidential 55 * 1 case = 24 servings of 300ml beverage

Pmx Tower

Pmx Machine


Cost Rs 2.65 Lakh

Maintenance Cost

Rs 1200/Annum Rs 10,000/Annum 2 Trips Monthly – One for Preventive

Main., Other for Sanitation


No. of Valves 6

Input Ingredients Conc., CO2, Water

Output Product Carbonated Beverage


Hurdle rate 65 cups/day

Cost Rs 1.75 Lac/unit (Installed in Pair) + Rs 2.6 Lac (other equipment's)

Maintenance Cost Rs 10,000/Annum. 2 Trips Monthly –for Preventive Main and Sanitation


No. of Valves 8 per machine (Total 16)

Input Ingredients Conc., CO2, Water

Output Product Carbonated Beverage

Dimensions (cm) 69 (H) X 47 (W)

Hurdle rate 100 cups/day


BEVERAGES/FOODS EQUIPMENTS

Avm Merchant 6

Cost Rs 4.5 Lakh

Water Connection No

No. of Valves NA


Output Product NA

Dimensions (cm) 180 (H) X 110 (W) X 95(D)

Maintenance Cost Rs 12,000/Annum

Capacity 30 Packs of Snacks + 200 Bottles of Beverages

Hurdle rate 2920 cases/year


FOODS EQUIPMENTS

Counter Top Rack Counter Top Rack Premium Hospitality Rack

Cost Rs 1500

Shelves 2

Facings/Shelf 2

Depth/Facing 2

Capacity (Packs) 8

Cost Rs 2500

Shelves 2

Facings/Shelf 5

Depth/Facing 2

Capacity (Packs) 20

Cost Rs 4000

Shelves 4

Facings/Shelf 4

Depth/Facing 8

Capacity (Packs) 128


FOODS EQUIPMENTS

MODC Rack Foods Rack Quaker Express Rack

Cinema Hawking Tray

Cost Rs 1800

Shelves 5

Facings/Shelf 5

Depth/Facing 3

Capacity (Packs) 75

Cost Rs 5000

Shelves 5

Facings/Shelf 5

Depth/Facing 5

Capacity (Packs) 125

Cost Rs 1500

Shelves 3

Facings/Shelf 2

Depth/Facing 2

Capacity (Packs) 12

Cost Rs 2500


• Touch Screen User Interface

• Small footprint

• Capable of running digital media

• Suitable for Self Serve or Crew serve

• 12 ingredients e.g.: 8 brands & 4 flavor shots

• Capability for high-low-non carb

• One common architecture supports multiple languages, brands globally

An example of a recent innovation success …Pepsi Touch


Another recent success: ICE BOLT frozen slush at cinemas


Our Equipment priorities are to

• Get the right throughput from the equipment to justify ROI

• Ensure Quality Control

• Reduce base equipment acquisition cost & service costs

• Meet customer need of space constraints & energy efficiency, while be attractive looking to drive impulse purchase

• Support innovations that can drive innovative products (e.g. Flavor Shots)


The Key Considerations for PepsiCo when launching an innovation

• How will we differentiate so as to earn a premium revenue realization

• Does the capex justify the volume and ROI

• Who will be our partners – in-house, franchisee, 3rd Party manufacturer, customer, etc.

• How will we distribute effectively: go-to-market strategy

• How will we control product quality

• How will we protect the brand from dilution


3. BEST PRACTICE CASE STUDIES The Sweet Spot: Consumer, Customer And PEPSICO

A few of our success stories from across the world

Country Initiative Customer

A INDIA Cinemas Activation PVR

B Mexico Doritos street snack

C Puerto Rico Quaker QSRs

D US Culinary Innovation Taco Bell

E UK Breakfast McDonald’s

F Other Products/Cases


A. CINEMAS ACTIVATION India

Cinema is the no. 1 entertainer in India

Opportunity to engage with consumers & generate billions of consumer impressions

988+ Multiplex screens

3.04 Average trips

p.a. to a cinema

1200% Growth in multiplexes

over past five years

Fuelled by a exponential growth in multiplex culture Consumers are most engaged in this channel

3770 million Number of tickets sold p.a.


CINEMA IS A RELIGION IN INDIA


We first identified barriers to beverage consumption

16%

6%

10%

10%

16%

42%

Others

Show Time

Packaging

Lack of Choice

Wasn't Enough Time

Unreasonable Pricing


Tackling Barrier 1: Too expensive

SR Strike Rate


Overcoming Barriers 2/3: Time shortage, Less choices

Mirinda Freeze

7Up Nimbooz Masala Soda


Ensuring we built brand imagery at every touch point

Queues


RESULTS: Both Volumes and Imagery Up significantly


Learnings captured in a 6*2 framework…


Resulting in continued leadership at Indian Cinemas


B. DORITOS Mexico

Leverage existing packaged offering;

Customize for a portable Center of Plate/Snack

Winning on the Street in Mexico

Doritos Spicy Sweet Chili Walking Chicken Curry


C. QUAKER Puerto Rico

Consumer lifestyles are changing

On the go lifestyle.

55% of consumers that eat breakfast, consume it OOH.

45% of consumers that have breakfast OOH, eat @ a Quick Service Restaurant (QSR) Chain.

Consumers have considerably reduced their grocery expenses.

Consumers look for prepared meal options.


Quaker has strong equity in the market

Quaker Oatmeal #1 in the World

High SOM 83% (Value)

High TOM 90%

Penetration 85%

Strong Health related attributes: Nutritious, Healthy and Good for the Heart Cholesterol “helper” and Fiber among

the most remembered product characteristics

Puerto Rico carries one of the highest Oatmeal Per cap around the world (1 KG)

Oatmeal is the most important segment in Hot Cereals PR, accounting for 71% of mix

Total PR SOM - Hot Cereal

71%

16%

4% 7% 2%

Oatmeal Wheat

Cream of Corn Rice

Mixed

SOM - Share of market | TOM - Top of Mind


Based on Customization, Logistics…

Channel Customized Product

Product: Instant Oatmeal Fortified with Iron

Cut: PR’s Market Oatmeal Special Cut

Size: 70.5 ounces/2,000 Grs. per bag

Case Count: 6 units/per case

Cost: $XX per case

Quick Delivery Response

Engaged through Ballester Hermanos (Distributors) Food Service Representatives

Client Order’s

Final Client

BH Delivers 48 hours


…Profitability and Partnership

High Margin Proposition

• Client Cost per bag- XX – XX% SRP/Kilo benefit

• Servings per bag- 32 (for a finished 8 ounce

product)

• Ounces per serving- 2.0 Oz (0.2oz of spoilage)

• Oatmeal cost per serving- XX

• Average SRP per cup - XX

Contract Elements

Media, In Store and equipment negotiations varies by QSR Based on BE

Specialized Equipment Targeted

Nutritional Seminars

Oatmeal Cooking

Trainings Media Exposure

In Store Visibility


Register Topper

Menuboard

Billboards

Windows Decal Banners

Menuboard Trayliner

In-Store Dangler Table Tent

Created a strong Quaker QSR relationship


Product Specifications (e.g.)

Estimated Raw Material Cost: XX Average SRP 8 ounces-XX

Recipe for 8 ounces

serving/Costs

Additional Equipment

Quaker Oats X

Milk X

Sugar X

Salt X

Cup, Lid & Spoon X

Oats Cooker Storage/Quality Preservation

Cooking Time: 20 min/Cost per unit XX Canister/Cost per unit X


D. CULINARY INNOVATION USA

How Does PepsiCo add Value

Our brands provide flavor, texture and fun to existing offerings

… and they also must be simple for an operator to execute


Taco Bell: Evolution from CSD Supplier to Total Culinary Solutions Provider

YESTERDAY: CSD Supplier

TODAY: Total Food & Beverage Solutions Partner


New Opportunity: Drive “Center of the Plate” Menu Innovation Leveraging PepsiCo Brand

Portfolio and Culinary Expertise

Taco Bell needed to “re-invigorate” the menu


Building a solid, incremental foods business with Taco Bell

PepsiCo Brands can Add Value by Differentiating Base Offerings Through Branded Innovation

Establish Permanent Menu Item

• 2010: P5 National Launch (XX MM)

• 2011: FY (XX MM)

• 2012: FYF (XX MM)

Build Culinary Pipeline

• 2011: P1-P5 (X MM)

• 2012: P1-P2 (X MM)

Launch Iconic Signature News

• 2011: Test Market

• 2012: P3 National Launch


Doritos Loco Taco… “Re-inventing the Taco!” Greg Creed

Taco Bell’s DLT Launch Objective: Build a $1B platform

Fire and Ice…


… driving increased PepsiCo importance to Taco Bell

Taco Bell Sales 2008 $X Billion Taco Bell Sales 2012F $X Billion

We have just begun…

Pepsi = 13-15% of TB Sales

Pepsi + Frito-Lay = 22-25% of TB Sales

DLT Extensions Late Night Breakfast OASIS


E. BREAKFAST UK

Bending breakfast habits in the UK


Overview/Launch Rationale

We launched Quaker with McDonald’s at the end of 2004 as part of their new Breakfast menu…

Front window display Drive Thru menu


Overview/Launch Rationale

…the key benefit for McDonald’s was huge positive PR. Their objective was to drive consumer re-evaluation of the offer

Sandwell Express Walsall Express

Wolverhampton Express


Product Proposition

Simple and high quality porridge, a healthier way to start the day – breakfast positioning

Porridge Oats served with Jam or Syrup

FMO Build The product consists of approximately 27gr of Quaker Rolled Oats that is topped with skim milk 100% organic. Made-to-order in single servings, it is served hot – microwave - and offered in a paperboard cup with plastic spoon


Product Performance

We also refreshed our packaging in 2007 and McDonald’s gave Oatso Simple a more defined role supporting Healthier core food items


Product Performance

Quaker breakfast bowl giveaway leverages momentum and adds value


Stringent Operations Procedures


Huge Success

Delivered over

3.5 Million servings annually through McDonald’s.

Sales driven predominantly by significant up weight in McDonald’s Marketing

spend to support Breakfast


F. SOME OTHER EXAMPLES

In China, Unilever has seen big success in Food Service

Unilever Food Solutions success driven by 3-step philosophy

Outside of Unilever most concentrate & powder players are small

1

2

3

Open

Pour powder

Pour water

For LRB, Lipton currently provides mango tea and lemon tea in powdered format for preparation on-premise

Concentrate

Powder


Factors that have contributed to this success

Dedicated team and organization support

Separate reporting org.

• Team reports directly to Global Food Solutions head

• Dedicated sales force, servicing key accounts

• Experienced chef in each key areas

for sales and service

Tailored GTM model

Tailor designed GTM model

• Both dedicated KA sales and chef team serving all major restaurants

• Relying on specialized restaurant distributors to distribute, leveraging their scale benefits

Value added service outside realm of food and beverage

Deep culinary expertise

Chefs provide new menu items with recipes and ingredients to customers

Comprehensive partnership model with restaurants, providing restaurant related training

Kitchen management

Restaurant service management

Consumer management

Unilever F/S team

Specialized restaurant

distributors

Unilever Food Solutions

F/S HQ

F/S

Country

Chef Sales

Unilever

Corporate HQ

China

Ice-cream

Foods Personal

care


The QSR ‘Wholesome’ Breakfast Landscape across markets


http://www.google.co.uk/imgres?imgurl=http://dealseekingmom.com/wp-content/uploads/2009/12/Naked-Juice.jpg&imgrefurl=http://dealseekingmom.com/get-10-back-on-10-bottles-of-naked-juice-mail-in-rebate/&usg=__TrFgcohxvsWO65WxwsroAS5ubHg=&h=200&w=241&sz=27&hl=en&start=3&zoom=1&tbnid=-zXJ5UU3BmtwjM:&tbnh=91&tbnw=110&ei=rSVrTuCmOoOY8QOisdgJ&prev=/search?q=naked+juice&um=1&hl=en&sa=N&tbm=isch&um=1&itbs=1

http://www.google.co.uk/imgres?imgurl=http://static.guim.co.uk/sys-images/Business/Pix/pictures/2011/3/29/1301386276089/Pret-A-Mangers-porridge-005.jpg&imgrefurl=http://www.guardian.co.uk/business/2011/mar/29/pret-a-manger-sales-porridge&usg=__lDq5afzg2PL0lo3DoLWfFXceMJk=&h=310&w=220&sz=20&hl=en&start=3&zoom=1&tbnid=O4uvYsJtVaYCIM:&tbnh=117&tbnw=83&ei=EktqTr7WLoS18QO-w7QT&prev=/search?q=pret+porridge+pot&hl=en&gbv=2&tbm=isch&itbs=1

http://www.google.co.uk/imgres?imgurl=http://www.themarketinggym.org/wp-content/uploads/2011/08/logo-pret1.jpg&imgrefurl=http://www.themarketinggym.org/marketing/pret-to-perfection/&usg=__oUfyerv2NgRS0UORmi0-NJudRh0=&h=1133&w=1180&sz=115&hl=en&start=4&zoom=1&tbnid=f0d8AjI52QLpfM:&tbnh=144&tbnw=150&ei=9EtqTp6TMdS58gOFptUX&prev=/search?q=pret+logo&hl=en&gbv=2&tbm=isch&itbs=1

http://www.google.co.uk/imgres?imgurl=http://static3.openrice.com.hk/UserPhoto/photo/2/1VT/00DE7EA2776095AC952AEAm.jpg&imgrefurl=http://www.openrice.com/english/restaurant/sr2.htm?shopid=25734&usg=__UiFopO0Y2dgNwpKa85u-BVKTpQI=&h=309&w=413&sz=39&hl=en&start=15&zoom=1&tbnid=9IpQY2utwCsObM:&tbnh=94&tbnw=125&ei=Yk1qTuP4F4Ow8QPY7vAg&prev=/search?q=honey+&+granola+pret+pot&hl=en&gbv=2&tbm=isch&itbs=1

http://www.google.co.uk/imgres?imgurl=http://www.dvp.co.uk/dvp2010/wp-content/uploads/2010/01/mcdonalds-logo.jpg&imgrefurl=http://www.dvp.co.uk/?attachment_id=216&usg=__PMDHWq_LO6KXZnz6NYAWbZIZG38=&h=693&w=900&sz=66&hl=en&start=2&zoom=1&tbnid=LWEff2642QOEpM:&tbnh=112&tbnw=146&ei=ukBqTuu3GYGZ8QOy64gw&prev=/search?q=mcdonalds+logo&hl=en&gbv=2&tbm=isch&itbs=1

http://www.google.co.uk/imgres?imgurl=http://www.shropshirestar.com/wp-content/uploads/2008/08/greggs-logo.gif&imgrefurl=http://www.shropshirestar.com/?attachment_id=42444&usg=__zF6ifSZzIqF-kwFw1Ivf5TOBQWg=&h=114&w=450&sz=6&hl=en&start=2&zoom=1&tbnid=isdYxwSpxk8R5M:&tbnh=32&tbnw=127&ei=QCprTvfPHIaZ8QOui602&prev=/search?q=greggs+logo&um=1&hl=en&sa=N&tbm=isch&um=1&itbs=1

Finally, some examples of partnering customer led beverage innovation


4. WHAT WE EXPECT FROM YOU

Bringing up the core business challenge again…

How should PepsiCo India participate in the rapidly expanding business opportunity provided by increased out-of-home

eating and drinking?*

What is the best end-to-end business model solution to monetize our brand and equipment assets, to ensure we gain on every front viz.

• Volume & Value

• Profit

• Equity

• Partnerships with ‘Food Service’ Customers

*also referred to as On Premise(OP) or Foodservice (FS) within the industry


Specifically, we would like you to answer questions such as….

• What are the “low hanging fruit” opportunities & solutions and which ones are farther out?

• For Innovations, how should we do “custom” innovation that gives us a sustainable pipeline and builds PepsiCo incumbency? And how should we do “platform” innovation that creates menu by day part and/or cohort?

• What kind of segmentation model might be most useful to identify opportunities – consumer X customer X occasion?

• How can we take our brand activations to the next level in this space? What should be our brand portfolio strategy – i.e. which brands for which customers, occasions, cohorts?

• What new/modified equipment can we employ to maximize the opportunities keeping in mind cost, space, simplicity, image and convenience considerations?

• What is the ‘Business Model’ of the idea - P&L impact of the solutions, Manufacturing details, Distribution, Partnerships, etc. Both short term and longer term? For us and for our customer partners?


For each “Solution” that you propose:

Please ensure that you have considered well, and have described: • A business model solution that captures:

– Should it be completely company owned or have a mix of partnerships with franchise/3rd parties to deliver your recommendation

– Please present the pros & cons properly before suggesting recommendation

• Benefits to PepsiCo in terms of: – Strategic Win

– Volume

– Value

– Profit

– Brand Equity

– Sustainability and

– Customer relationship

– Partnerships

• Benefits to the Customer in terms of: – Attracting/retaining consumers

– Ticket upsizing

– Portfolio planning/gaps

– Value/volume/profit gains

– Longer term strategic intent

• Benefits to the Consumer in terms of functional and emotional payoffs from the product and the experience together


How We Will Evaluate

Not more than 5* pages per entry

Will be entertained for the first shortlist.

If shortlisted, you will get the chance to submit a more detailed entry for the next round.

Evaluations will be on the basis of: 1. Appreciation of the business problem

2. Power of Insight identified for the situation analysis

3. Equipment Innovation and P&L workings

4. Creativity and Feasibility of solutions proposed – For Customer and for PepsiCo

5. Clarity of articulation/presentation

Ideas that drive revenue profitably will be given high weightage

*In power point sl ides, not including the cover slide. Longer entries will get automatically disqualified at the first stage


6. APPENDIX About PepsiCo

Acronyms

PepsiCo: Great Performance, Great Values!

$26 mm contribution to foundation causes

Water Global Awards- Environmental Company

of the Year

3rd in CR Magazine- 100 Best Corporate Citizens

World No.2 in F&B

Presence in 200 countries with over 500

brands

22 brands > $1 bn sales each

285,000 employees

Revenues $65 bn

World No.3 in FMCG Ranked 1st in 2011 Dow

Jones Sustainability World Index F&B sector


PepsiCo India: An Exciting Journey

TIME

VO

LUM

E

1993

1995

1996 1998

1999

2002

2006 2008

2000

2009

2010

2011

2012


PepsiCo India: Performance with Purpose!

CII National Award Water Management

AMCHAM Innovative CSR Award Kolkata Plant

Golden Peacock Award Water Conservation

Social Governance Award “Waste to Wealth”

PepsiCo Award Environmental Sustainability

Water Digest Award For Water Practices


Vast & structured Make-Sell-Deliver footprint

Foods plants

Franchise owned bottling plants

Company owned bottling plants

Kolkata

Pune

Channo Bazpur

Jainpur

Sataria

Panipat

Bharuch

Mahul

Dukes Aurangabad

Roha

Hyderabad

Bangalore

Palakkad

Chennai

Madurai

Jammu

Phillaur

Delhi Noida

Chaupanki

Kosi

Jodhpur

Bhopal

Nagpur

Jharkhand

Patna

Cuttak

Vizag

Guntur Goa Dharwad

Guwahati

Pondicherry co-packer

Trichy co-packer

Kolkata

Pune

Channo

Erode

Rajkot

Hosur

Guwahati Sonepat

Gwalior

Bangalore

Kolhapur

Faridabad Bhiwadi

Hyderabad

Kanpur

Plant

Distributor Hub

Wholesaler Urban spoke Rural spoke

Retailer Retailer

Retailer

BEVERAGES

Retailer

Plant

FOODS

DC

Distributor Wholesaler

Retailer Retailer


Beverages Portfolio

Core products

Carbonated Soft Drinks (CSD)

Pepsi/7Up/Mirinda/

Mountain Dew/Innovation- Pepsi Atom/7Up Nimbooz

Masala Soda

Evervess Soda

Slice

Nimbooz

Aquafina

Tropicana

Gatorade

TATA Gluco+

TATA Water+

Lipton Ice Tea

Himalayan

Juice Based Drinks (JBD)

Water

Juices

Sports Drinks

Ice tea

Water

Premium products

Value Products


Foods Portfolio

Oats

Poha

Upma

Salty

Potato Chips

Bridge

Extruded

Traditional

Lay’s

Kurkure

Extruded (Monster Paws/ Puff Corn)

Lehar

Lay’s Baked

Uncle Chipps

Cheetos

Quaker


LRB Liquid Refreshment Beverage

CSD Carbonated Soft Drink

MBD Mango Based Drink

FS Food Service

OP On premise

QSR Quick Service Restaurant

FSR Full Service Restaurant

T&L Travel & Lodging

SEC Socio Economic Classification

WIFM What’s in it for me

SR Strike Rate

SSG Same store growth

CTS Consumer Track Survey

SOM Share of market

CAGR Compounded Annual Growth Rate

TOM Top of mind

Frequently used acronyms


biac final deck

Documents

presentation presentation

pepsico confidential

property of pepsico

pepsico office

agent preparers

biac participants

indras advisors contest

respective owners