The carbonated soft drink industry:-

General Introduction:-

The carbonated soft drinks industry includes basically the soda base drinks as well as the

bottled water. The Indian Soft drinks industry is dominated by the two soft drinks major

PepsiCo and Coca Cola, there are few regional players in the market like Parle Agro,

Bislery, Dharival.

The demand for the carbonated soft drinks is largely influenced by the taste of the

customers, age groups and the demographic conditions. For example the demand for

such drinks escalates to high number in north India during the summer and drops in

winter while in southern India is comparably the steady flow market. Also the main

target segment for such soft drinks is the youth. However the Indian soft drink market is

characterised by the lower income and higher income consumers in consumption

pattern, also it is the lowest in the number on the basis of the consumption. Average

Indian consumer consumes 8 bottles per year while the maximum is 800 bottles of soft

drinks consumed by the American consumer.

Typically the soft drinks form basically 2 segments. They are as follows

Carbonated

Non-Carbonated

In carbonated segment the main base of the drink is the Soda water and various flavour

are added along with the sugar syrup. Then this drink is packed in the containers. This

process is comparatively simple. The presence of Co2 helps these drinks remain micro

free as it acts as micro killer.

In case of the Non-carbonated drinks i.e. basically juice base drinks the pulp of various

fruits is the base of such drinks. In manufacturing these drinks, the pulp is mixed with

the sugar syrup to make the desired drink. This drink is then needed to be pasteurised,

so as to provide it the shelf life, otherwise the juice may get rotten and drink may get

spoiled. These juice base drinks are more sensitive to the micro contamination as

compare to the carbonated drinks.

The other part of the Non-carbonated drinks is the bottled drinking water. This

particular segment has shown tremendous growth in lat couple of years. As far as

PepsiCo’s Aquafina is concerned, it has register growth of 35% in 2009 over 2008.

The water received in the factory is processed through the various purifying process like

coagulation process, reverse osmosis process etc before it gets packed.

Operations

Following is the general description of the process of manufacturing the carbonated

drinks, non-carbonated drinks and bottled drinking water.

Carbonated Soft Drinks

The flavoured syrup is supplied by the primary manufacturer.

The sugar syrup is prepared at the plant level.

The addition of the sugar and the flavoured syrup in appropriate proportions as

per the requirement of the drink.

Filling the beverage inside the containers and sealing them

Application of date and batch coding, labels

Packing the containers inside the carton boxes.

Non-Carbonated/Juice base drinks

The fruit pulp is supplied by the primary manufacturer.

The sugar syrup is prepared at the plant level.

The addition of the sugar and the fruit pulp along with the necessary

preservatives is mixed in appropriate proportions as per the requirement of the

drink.

Juice is then made to pass through the pasteuriser, once the pasteuriser attains

the desired temperature, the microbial elements gets killed.

This pasteurised juice is now ready for filling, which is packed inside the

containers.

Bottled Drinking Water

The water is first passed through the pressurised sand filters to remove major

impurities.

Secondly it is passed through the activated carbon filters to remove the odour,

taste and other impurities omitted by sand filters.

After this water is passed through the de-gasser to remove the dissolved gases.

The de-gassed water is then passed through the ultra violet rays to kill the micro

organisms/ bacteria present in the water.

Finally the water is passed through the fine membranes to remove the dissolved

impurities in water causing the hardness to water. This process is called as

Reverse Osmosis. The water available at the out let of these membranes is of

zero hardness.

This water is now available for filling in the bottles. Before filling the water,

ozone is added in the water to kill any possible trace of the bacteria present in

the water.

After filling the bottled is sealed and labelled and packed into the cartons.

These packed boxes are then shipped to the distributors as per the demand placed at

producing plant. Various pack sizes are developed to cater the various demands of the

customers. The other method adopted is to supply the sweetened flavoured syrup to

the retail outlets with fountain machines. Here the retailer makes the drink as per the

demand by mixing sweetened flavoured syrup, water and carbon dioxide in the fountain

machine.

The manufacturing operations of the majors like Pepsi and Coke comprises of 2

components.

Company owned bottling operations (COBO)

Franchise owned bottling operations (FOBO)

The company owned operations are mainly governed by the company itself while the

franchise owned operations are governed by the bottler. In case of the bottler

operations the company supplies the flavoured syrup as well as the raw and packaging

material to the bottler and bottler manufactures the product for company. Company

mainly charges the bottler for the supply of the flavoured syrup which is called as

concentrate. The areas of distribution of the products are well defined between the

bottler and the company.

PEPSICO INTERNATIONAL

HISTORY OF PEPSICO

1898—Caleb Bradham the pharmacist who formulated a drink, known as "Brad's

Drink," a combination of carbonated water, sugar, vanilla, rare oils and cola nuts, is

renamed "Pepsi-Cola" on August 28, 1898.

1902-- Bradham applies for a trademark with the U.S. Patent Office, Washington D.C.,

and forms the first Pepsi-Cola Company.

1905--Pepsi-Cola's first bottling franchises are established in Charlotte and Durham,

North Carolina. Pepsi receives its new logo, its first change since 1898.

1934--A landmark year for Pepsi-Cola. The drink is a hit and to attract even more sales,

the company begins selling its 12-ounce drink for five cents (the same cost as six ounces

of competitive colas).

1941--The New York Stock Exchange trades Pepsi's stock for the first time.

1960--Young adults become the target consumers and Pepsi's advertising keeps pace

with "Now it's Pepsi, for those who think young."

1963-- Pepsi-Cola continues to lead the soft drink industry in packaging innovations,

when the 12-ounce bottle gives way to the 16-ounce size.

1965--Expansion outside the soft drink industry begins. Frito-Lay of Dallas, Texas, and

Pepsi-Cola merge, forming PepsiCo, Inc.

1970--Pepsi introduces the industry's first two-litter bottles. Pepsi is also the first

company to respond to consumer preference with light-weight, recyclable, plastic

bottles.

1984--Pepsi advertising takes a dramatic turn as Pepsi becomes "the choice of a New

Generation."

1985--After responding to years of decline, Coke loses to Pepsi in preference tests by

reformulating. However, the new formula is met with widespread consumer rejection,

forcing the re-introduction of the original formulation as "Coca-Cola Classic."

1991-- Pepsi introduces the first beverage bottles containing recycled polyethylene

terephthalate (or PET) into the marketplace. The development marks the first time

recycled plastic is used in direct contact with food in packaging.

1992-- Pepsi-Cola and Lipton Tea Partnership is formed. Pepsi will distribute single

serve Lipton Original and Lipton Brisk products.

1994-- Pepsi Foods International and Pepsi-Cola International merge, creating the

PepsiCo Foods and Beverages Company.

1997-- PepsiCo. announces that it will spin off its restaurant division to form Tricon

Global Restaurants, Inc. Including Pizza Hut, Taco Bell, & KFC, it will be the largest

restaurant company in the world in units and second-largest in sales.

1998-- Pepsi celebrates its 100th anniversary.

PEPSICO – THE PARENT COMPANY

PepsiCo, Inc. is one of the world's largest food and beverage companies. The company's

principal businesses include:

Frito-Lay snacks

Pepsi-Cola beverages

Gatorade sports drinks

Tropicana juices

Quaker Foods

PepsiCo, Inc. was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay.

Tropicana was acquired in 1998. In 2001, PepsiCo merged with the Quaker Oats

Company, creating the world’s fifth-largest food and beverage company, with 15 brands

– each generating more than $1 billion in annual retail sales. PepsiCo’s success is the

result of superior products, high standards of performance, distinctive competitive

strategies and the high level of integrity of our people.

Pepsi-Cola North America and PepsiCo Beverages International

Caleb Bradham, a New Bern, North Carolina druggist, who first formulated Pepsi-Cola,

founded PepsiCo’s beverage business at the turn of the century. Today consumers

spend about $33 billion on Pepsi-Cola beverages. Brand Pepsi and other Pepsi-Cola

products – including Diet Pepsi, Pepsi-One, Mountain Dew, Slice, Sierra Mist and Mug

brands – account for nearly one-third of total soft drink sales in the United States, a

consumer market totaling about $60 billion.

Pepsi-Cola also offers a variety of non-carbonated beverages, including Aquafina bottled

water, Fruitworks and All Sport.

In 1992 Pepsi-Cola formed a partnership with Thomas J. Lipton Co. Today Lipton is the

biggest selling ready-to-drink tea brand in the United States. Pepsi-Cola also markets

Frappuccino ready-to-drink coffee through a partnership with Starbucks.

In 2001 SoBe became a part of Pepsi-Cola. SoBe manufactures and markets an

innovative line of beverages including fruit blends, energy drinks, dairy-based drinks,

exotic teas and other beverages with herbal ingredients.

Outside the United States, Pepsi-Cola soft drink operations include the business of

Seven-Up International. Pepsi-Cola beverages are available in about 160 countries and

territories.

Pepsi-Cola began selling its products internationally in 1934 with its operations in

Canada. Operations grew rapidly beginning in the 1950s. In addition to brands marketed

in the United States, major products include Mirinda and Pepsi Max. Pepsi-Cola North

America includes the United States and Canada. Key international markets include

Argentina, Brazil, China, India, Mexico, Philippines, Saudi Arabia, Spain, Thailand and the

United Kingdom. PepsiCo Beverages International also produces, sells and distributes

Gatorade sports drinks as well as Tropicana and other juices internationally.

Pepsi-Cola provides advertising, marketing, sales and promotional support to Pepsi-Cola

bottlers and food service customers. This includes some of the world's best-loved and

most-recognized advertising. New advertising and exciting promotions keep Pepsi-Cola

brands young.

The company manufactures and sells soft drink concentrate to Pepsi-Cola bottlers. The

company also provides fountain beverage products.

PepsiCo Americas Foods (PAF)

PAF includes Frito-Lay North America, Quaker Foods North America and all Latin

America food and snack businesses, including Sabritas and Gamesa businesses in

Mexico.

Frito-Lay and Pepsi Join

In February 1965, the Board of Directors for Frito-lay, Inc. and Pepsi-Cola announced a

plan for the merger of the two companies. On June 8, 1965, the merger of Frito-Lay and

Pepsi-Cola Company was approved by shareholders of both companies, and a new

company called PepsiCo, Inc. was formed. At the time of the merger, Frito-Lay owned 46

manufacturing plants nationwide, had more than 150 distribution centers across the

United States, and was listed on the New York Stock Exchange.

Frito-Lay North America and Frito-Lay International

PepsiCo's snack food operations had their start in 1932 when two separate events took

place. In San Antonio, Texas, Elmer Doolin bought the recipe for an unknown food

product – a corn chip – and started an entirely new industry. The product was Fritos

brand corn chips, and his firm became the Frito Company.

That same year in Nashville, Tennessee, Herman W. Lay started his own business

distributing potato chips. Mr. Lay later bought the company that supplied him with

product and changed its name to H.W. Lay Company. The Frito Company and H.W. Lay

Company merged in 1961 to become Frito-Lay, Inc.

Today, Frito-Lay brands account more than half of the U.S. snack chip industry.

PepsiCo began its international snack food operations in 1966. Today, with operations in

more than 40 countries, it is the leading multinational snack chip company, accounting

for more than one quarter of international retail snack chip sales. Products are available

in some 120 countries. Frito-Lay North America includes Canada and the United States.

Major Frito-Lay International markets include Australia, Brazil, Mexico, the Netherlands,

South Africa, the United Kingdom and Spain.

Often Frito-Lay products are known by local names. These names include Matutano in

Spain, Sabritas and Gamesa in Mexico, Elma Chips in Brazil, Walkers in the United

Kingdom and others. The company markets Frito-Lay brands on a global level, and

introduces unique products for local tastes.

Major Frito-Lay products include Ruffles, Lay's and Doritos brands snack chips. Other

major brands include Cheetos cheese flavoured snacks, Tostitos tortilla chips, Santitas

tortilla chips, Rold Gold pretzels and Sun Chips multigrain snacks. Frito-Lay also sells a

variety of snack dips and cookies, nuts and crackers.

Quaker Foods North America

The Quaker Oats Company was formed in 1901 when several American pioneers in oat

milling came together to incorporate. In Ravenna, Ohio, Henry D. Seymour and William

Heston had established the Quaker Mill Company and registered the now famous

trademark. Seymour wanted his product to be a symbol of honesty, integrity and

strength. The figures of a man in Quaker clothes became the first registered trademark

for breakfast cereal and remain the hallmark for Quaker Oats today. In Cedar Rapids,

Iowa, John Stuart and his son, Robert, and their partner, George Douglas, operated the

largest cereal mill of the time. Ferdinand Schumacher, known as "The Oatmeal King,"

had founded German Mills American Oatmeal Company in 1856.

Combining The Quaker Mill Company with the Stuart and Schumacher businesses

brought together the top oats milling expertise in the country as The Quaker Oats

Company. The first major acquisition of the company was Aunt Jemina Mills Company in

1926, which is today the leading manufacturer of pancake mixes and syrup.

In 1986, The Quaker Oats Company acquired the Golden Grain Company, producers of

Rice-A-Roni.

PepsiCo merged with The Quaker Oats Company in 2001. Its products still have the

eminence of wholesome, good-for-you food, as envisioned by the company over a

century ago.

Vision of PepsiCo

PepsiCo Mission

"To be the world's premier consumer Products Company focused on convenience foods

and beverages. We seek to produce healthy financial rewards to investors as we provide

opportunities for growth and enrichment to our employees, our business partners and

the communities in which we operate. And in everything we do, we strive for honesty,

fairness and integrity."

PepsiCo is a world leader in convenience foods and beverages, with 2009 revenues of

more than $39 billion and more than 185,000 employees across the world. Its world

renowned brands are available in nearly 200 countries and territories. PepsiCo gained

entry to India in 1989 by creating a joint venture with the Punjab government-owned

Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. This joint venture

marketed and sold Lehar Pepsi until 1991, when the use of foreign brands was allowed;

PepsiCo bought out its partners and ended the joint venture in 1994. Firstly Pepsi was

banned from import in India, in 1970, for having refused to release the list of its

ingredients and in 1993, the ban was lifted, with Pepsi arriving on the market shortly

afterwards.

PepsiCo has grown to become the country’s largest selling food and beverage

companies. One of the largest multinational investors in the country, PepsiCo has

established a business which aims to serve the long term dynamic needs of consumers

in India.

PepsiCo India and its partners have invested more than U.S. $700 million since the

company was established in the country in 1989. In India, PepsiCo provides direct

employment to 5,000++ people and indirect employment to 60,000 people including

suppliers and distributors.

The group has built an expansive beverage, snack food and exports business and to

support the operations are the group’s 43 bottling plants in India, of which 15 are

company owned and 28 are franchisee owned. In addition to this, PepsiCo’s Frito Lay

snack division has 3 state of the art plants. PepsiCo’s business is based on its

sustainability vision of making tomorrow better than today. Our commitment to living

by this vision every day is visible in our contribution to our country, consumers, farmers

and our people.

PepsiCo India’s expansive portfolio

Refreshment beverages

Sports drinks

100% natural fruit juices and juice based drinks

Pepsi, 7 UP, Mirinda and Mountain Dew, in addition to low calorie options– Diet Pepsi

and 7Up Light; hydrating and nutritional beverages such as Aquafina drinking water,

isotonic sports drinks - Gatorade, and 100% natural fruit juices and juice based drinks –

Tropicana, Tropicana Twister and Slice. Our local brands – Lehar Evervess Soda, Dukes

Lemonade and Mangola complete our diverse spectrum of brand

PepsiCo’s snack food company:-

PepsiCo’s snack food company, Frito-Lay, is the leader in the branded potato chip

market and was amongst the first companies to eliminate the use of trans fats and MSG

in its products. It manufactures Lay’s Potato Chips; Cheetos extruded snacks, Uncle

Chipps and traditional namkeen snacks under the Kurkure and Lehar brands. The

company’s high fiber breakfast cereal, Quaker Oats, along with Lehar Lites, low fat and

roasted snack options enhance the choices available to the growing health and wellness

needs of our consumers. Frito Lay’s core products, Lay’s, Kurkure, Uncle Chipps and

Cheetos are cooked in Rice Bran Oil to significantly reduce saturated fats and all of its

products contain voluntary nutritional labeling on their packets.

PepsiCo SKU’s