PROJECT REPORT

ON
“Opportunity in Soft drink
industry”

Submitted To:
Submitted By:
Ms. Anuradha tiwari sharad
kumar singh
RollNo.JKBS083296

PGDBM
2ND SEM\(MKT)

Session:-2008-10
 J K BUSINESS SCHOOL,
GURGAON
( HARYANA)

and value creation in

the soft drink industry Table of Contents

A view fromeloitte and SAPnsumer Business

1-Acknowledgement

2-Objective

3-History of the pepsico

4-corporate profile

5-Introduction and objectives

6-Industry background and overview

7-Market trends and industry challenges

8-Soft drink industry process improvement opportunities

9-Solutions for the soft drink industry

10-Conclusion

11-Reference

12- Analysis and Interpretation

13- Questionnaire
 ACKNOWLEDGEMENT

I am thankful to all the persons who are involved in this

project either directly or indirectly. This project came into the existence under the
supreme guidance of RAJESH Sir who helped me when I needed them in case of
difficulties that came into the project. He helped me solve all the problems without
any hesitation.
I am also very thankful to my faculty guide Ms Anuradha tiwari who gave
me support to make such a project whenever I needed. If any mistakes and
omissions are found in my project, kindly bring them to my attention. I am grateful
even to users of this application for the encouragement.

Place: Gurgaon Sharad kumar singh

 OBJECTIVE

• To know the present scenario of pepsi in Indian market.

• To know about the consumer’s product awareness.

• To know the opportunity in Indian market for betterment of sales

and profits.

• To analyse the services provided by the company to retailers and

customers.
 INDRA NOOYI CEO OF PEPSICO

History of the pepsico

PepsiCo Headquarters
PepsiCo World Headquarters is located in Purchase, New York, approximately 45
minutes from New York City. The seven-building headquarters complex was
designed by Edward Durrell Stone, one of America's foremost architects. The
building occupies 10 acres of a 144-acre complex that includes the Donald M.
Kendall Sculpture Gardens, a world- acclaimed sculpture collection in a garden
setting.

The collection of works is focused on major twentieth century art, and features
works by masters such as Auguste Rodin, Henri Laurens, Henry Moore, Alexander
Calder, Alberto Giacometti, Arnaldo Pomodoro and Claes Oldenburg. The gardens
originally were designed by the world famous garden planner, Russell Page, and
have been extended by François Goffinet. The grounds are open to the public, and
a visitor's booth is in operation during the spring and summer.
 Pepsi Cola North America, headquartered in Purchase, New
York, is the refreshment beverage unit of Pepsi Company
Beverages and foods, North America; a division of Pepsi Company
Inc. Pepsi Company Beverages and foods North America also
comprises Pepsi Company’s Tropicana, Gatorade and Quaker
Foods businesses in the United States and Canada.

Pepsi Cola North America’s Carbonated Soft Drinks including

Pepsi, Diet Pepsi, Pepsi twist, Mountain Dew, Mountain Dew Code
Red, Sierra Mist and Mug Root Beer account for nearly One-Third
of Total soft drinks sales in the United States.

Pepsi Cola North America’s Non -Carbonated Beverage

portfolio includes Aquafina, which is the number one brand of
bottled water in the United States. Dole single serve juice and
SoBe, which offers a wide range of Soft drinks with Herbal
ingredients. The Company also makes and markets North
America’s best selling, ready to drink iced teas and coffees via
joint ventured with Lipton and Starbucks, respectively

Pepsi Company Inc is one of the World’s largest food and

beverage companies,
 The Company’s principal business includes:

✔ Frito-Lay snacks.
✔ Pepsi Cola Beverages.
✔ Gatorade sports Drinks.
✔ Tropicana Juices.
✔ Quaker Foods.

Pepsi Company Inc is a diversified consumer products

company with 3 Major lines of Business:

1. Beverages (Pepsi Cola):- It is Pepsi’s oldest and largest

business. Includes drinks like Pepsi, Diet Pepsi,
Mountain Dew, Slice, Mug. 7UP etc., available in 194
countries.
2. Snack Foods: - It includes the famous Frito-Lay Brand in
the United States and other International Brands
(Example: Smith Crisps Ltd., in the UK) – available in 40
Countries.
3. Restaurants: - Includes leading brands like Pizza Hut,
Taco Bell and KFC (Operating in 94 Countries) and some
relatively lesser known ones.
California Pizza Kitchen, Chevy’s Mexican Restaurants,
Hot n now mainly in the U.S.
 Pepsi Cola Company was founded in 1903 when Caleb D
Bradham, a Pharmacist, started to market his Beverage intention
in North Carolina. Today, Pepsi Cola is the second largest soft
drink producer in the world. Also it has been ranked 10th most
recognized brand name in the world. INDRA NOOYI is the present
Chairman of PepsiCo in U.S.A.

PepsiCo Inc., was founds in 1965 through the merger of

Pepsi-Cola

Company and Frito-Lay. Tropicana was acquired in 1998, in 2001,

Pepsi Company merged with the Quaker Oats Company.

Pepsi Company’s success is the result of superior products,

high standard of Performance, distinctive competitive strategies
and the high level of integrity of their people.

Pepsi Company had been in the Indian market during the

mid-1950 but pulled out because of the lack of profitability. It
returned in 1990 by negotiating a Joint venture agreement with
Tata Industries, and Government owned Punjab Agro Industries,
realizing the rapidly growing incomes of Indian consumers. Rajeev
Bakshi is the present Chairman of PepsiCo India Holdings Pvt. Ltd.

Pepsi’s decision to enter Indian market was very wise

indeed. The Company today enjoys a foothold of the Indian
Market and its market share surpasses its nearest rival Coca-Cola.

The Indian soft drink market has been growing rapidly from a
billion in 1997 to about 5 billion bottles in 2003. Another thing,
which needs not to be forgotten, is that India’s middle class is
much large than China. Further more, many observers have
predicted that India will eventually become an economic giant,
thus growing incomes should support more sales.

Initially, Pepsi Company had to accept some limitations:

Limit ownership to 39.9%; place the Local “Lehar” Logo with its
logo and to export 75% of its concentrate among others. But
later, with liberalization of FDI, these very limitations became
Pepsi Company’s strengths, being the very first to be in the Indian
Market, much to the dismay of Coca-Cola.

Entry of Pepsi in Indian Market

Pepsi’s initial foray into the Indian Soft drink industry dates
way back to1956. However, it withdrew from the country in 1961
due to bottling problems.

Its second attempt into the Indian market was much better
planned. On Nov 9, 1987 the Government of India’s project
Approval Board (PAB) approved Pepsi Company’s (PepsiCo)
second proposal to enter the country. The then Government
regulations forbid the company from setting up a 100% owned
subsidiary, hence it entered the market in collaboration with
VOLTAS INDIA and PUNJAB AGRO. Later with the economic
liberalization in the country, PepsiCo was allowed to acquire the
Stakes of both of its collaborates. Since then, Pepsi has gone to
become the largest selling soft drink brand in the country.
 The Indian business unit has an annual sales turnover of
Rs.1100 Crore. The Government of India while allowing the entry
of Pepsi had put forth a series of stringent conditions like
introduction of latest food

processing technologies, high quota of exports, local partnership,

use of Indianised brand names etc., Pepsi, whose basic intention
was to consolidate its entry into the Indian market decide to cope
with the demand and approached the entire issue strategically
and finally succeeded in its mission.

To quote Pepsi had to operate in difficult circumstances our

launch was patchy virulent anti-Pepsi lobby and competitive
propaganda made it difficult , but like most big business, Pepsi
foods has been keeping up its efforts to mobilize support among
influential politicians. Pepsi managed to get quite a few well
wishers form among influential among the Member of the
Parliament and ministers friends of the project. Pepsi had

embarked on a massive campaign among politicians of the

opposite parties, the first of its kind by a foreign company in
India.

Pepsi dispatched over 100 video cassettes to key political

personality across all major political parties. The cassettes
containing recordings of the company's initial operations in the
state's economic growth. Along with the cassette, recipients also
received a small booklet providing detail of Pepsi's major
achievements and the future plans.

In building political support, Pepsi pledge equity and fairness

and to be judged on the fact and merit. The entry of Pepsi into
Indian market is a good example of an MNC strategically unifying
its interest with the demand of the Government.

PCI operates in India as:

• PepsiCo India Holdings Limited (PIHL)

Manufactures and distributes the beverages to the Up

Country Market.
 • PepsiCo India Marketing Company Limited (PCIM)

Marketing and Distribution / Sales to the local market.

The beverage business is carried out through 3 channels

namely:

COBO (Company Owned Bottling Operation)

1. UP (minus) Western UP.

2. West Bengal.

3. Karnataka (minus) NW Karnataka.

4. Kerala +South Tamilnadu.

5. Mumbai + Rest of Maharashtra.

6. Gujarat.

FOBO (Franchisee owned Bottling Operation)

1. Jammu and Kashmir.

2. Rajasthan.

3. Haryana + Delhi.

4. Western UP

5. Goa.

6. Punjab + Himachal Pradesh.

 7. Andhra Pradesh.

JV (Joint Venture).

1. Bhutan.

Brands:

Segment Products
Cola Pepsi
Clear Lemon Flavor 7 Up, Nimbooz
Cloudy Lemon Flavor Teem, Miranda Lime
Orange Miranda Orange
Juice Slice,twister
Soda Leher soda

Corporate profile

PepsiCo In India

PepsiCo entered India in 1989 and has grown to become one of the
country’s leading 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.$1 billion since
the company was established in the country. PepsiCo provides direct and
indirect employment to 150,000 people including suppliers and distributors.
PepsiCo India and its partners have invested more than U.S.$1 billion since
the company was established in the country. PepsiCo provides direct and
indirect employment to 150,000 people including suppliers and distributors.
PepsiCo nourishes consumers with a range of products from treats to
healthy eats, that deliver joy as well as nutrition and always, good taste.
PepsiCo India’s expansive portfolio includes iconic refreshment beverages
Pepsi, 7 UP, Mirinda and Mountain Dew, in addition to low calorie options
such as Diet Pepsi, hydrating and nutritional beverages such as Aquafina
drinking water, isotonic sports drinks - Gatorade, Tropicana100% fruit
juices, and juice based drinks – Tropicana Nectars, Tropicana Twister and
Slice. Local brands – Lehar Soda, Dukes Lemonade and Mangola add to
the diverse range of brands.

PepsiCo’s foods company, Frito-Lay, is the leader in the branded salty

snack market and all Frito Lay products are free of trans-fat and MSG. It
manufactures Lay’s Potato Chips, Cheetos extruded snacks, Uncle Chipps
and traditional snacks under the Kurkure and Lehar brands. The company’s
high fibre breakfast cereal, Quaker Oats, and low fat and roasted snack
options enhance the healthful choices available to 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.

The group has built an expansive beverage and foods business. To support
its operations, PepsiCo has 43 bottling plants in India, of which 15 are
company owned and 28 are franchisee owned. In addition to this,
PepsiCo’s Frito Lay foods division has 3 state-of-the-art plants. PepsiCo’s
business is based on its sustainability vision of making tomorrow better
than today. PepsiCo’s commitment to living by this vision every day is
visible in its contribution to the country, consumers and farmers.

Beverages

Pepsi Cola North America

Pepsi Cola International

Pepsi Wines and Spirits Snacks

Pepsi Food International

Pepsi Co

Frito-Lay
 Food Services

Pizza Hut

KFC

Taco Bell

PepsiCo Products in India

Pepsi

Miranda Orange

Miranda Apple

Slice- Mango

7 Up

Mountain DewAquafina

Performance With Purpose

Performance with Purpose articulates PepsiCo India's belief that its
businesses are intrinsically connected to the communities and world that
surrounds it. Performance with Purpose means delivering superior financial
performance at the same time as we improve the world.
To deliver on this commitment, PepsiCo India will build on the incredibly
strong foundation of achievement and scale up its initiatives while focusing
on the following 4 critical areas that have a business link and where we
believe that we can have the most impact.
 1. Introduction
Soft drinks are gradually overtaking hot drinks as the
biggest beverage sector in the world, with consumption
rising by around 5 percent a year according to a recent
report from Zenith International. But while the US
remains the biggest market for now, Asia is likely to be
the main driver of sales growth in the future.

This paper provides insights on the market trends facing

the soft drink industry. It outlines the specific challenges
confronting the companies operating in this arena,
such as ever-changing consumer tastes, a growing
emphasis on product safety, and the increasing power
of global retailers. This paper explores opportunities for
process improvement and cites specific solutions that
can empower soft drink companies to meet industry
challenges, both today and tomorrow, and drive
profitability and growth.

2. Industry background and overview

The business environment for the soft drink

industry
To understand the soft drink industry, one must first
look at the beverage industry as a whole. In recent
years, the beverage industry has been faced with new
opportunities and challenges. Changing consumer
demands and preferences require new ways of
maintaining current customers and attracting new ones.
Amid ever-increasing competition, beverage companies
must intensely court customers, offer high-quality
products, efficiently distribute them, ensure safety, and
keep prices low – all while staying nimble enough to
exploit new markets by launching new products. In this
environment, success depends on a company’s ability to
quickly capitalize on emerging opportunities.

The beverage industry is extremely competitive, with

private labels greatly influencing the environment. A
few global “beverage giants” produce many brands, but
those brands fall into self-contained categories as well.
Thus, the “beverage” market is not really one market;
it is a collection of markets with many different types
of products, processes and requirements. The beverage
market includes several different products that can be
grouped into two main categories: alcoholic (beer, wine,
spirits) and non-alcoholic (carbonated soft drinks, juice,
water, sports drinks, etc.). Each category, and often
each type, of beverage has its unique issues and needs.
Within the beverage industry, the soft drink market has
been showing significant growth in most countries in
the recent years, particularly in the emerging markets.
While the U.S. represents the largest overall soft drink
market and has the highest per capita consumption
level, most markets are showing double-digit growth
both in terms of volume and value. For instance, Mexico
and Poland are two markets in particular that stand out.

Within the soft drink sector, carbonated soft drinks

(CSD) continue to dominate the market, encompassing
traditional flavored beverages as well as sugar- and
caffeine-free drinks, which have soared in popularity.
Simultaneously, manufacturers are focusing on
innovation in order to maintain growth. New product
categories are emerging swiftly and many are already
consolidating, as consumer demand continues to shift
toward healthier products, such as bottled water, juices
and juice drinks, sport drinks, ready-to-drink teas, and
functional beverages.

Recent trends in the food and beverage market center

on product safety, quality, consumer demand, and
channel complexity (including the growing influence
of retailers on the supply chain). These trends have
impacted the beverage industry in general and the softdrink
sector in particular.

In this paper, we will focus on the issues relevant for

middle-market soft drink companies, defined as soft
drink producers or bottlers with an annual turnover of
$500 million to $2 billion USD. Nonetheless, the majority
of the points raised in the paper will be applicable to all
soft drink companies, regardless of size.

_ Business performance improvement priorities

the path to value
Against the backdrop of these market challenges, how
can soft drink companies drive profitable growth and
create value for their owners or shareholders?
In practical terms, there are four areas on which
companies in the soft drink business need to focus:
-Revenue protection and enhancement – for
example, as driven by product and packaging
innovation, differentiated quality, improved product
availability, and better management of customer
relationships

-Cost reduction/margin improvement –

for example,
through improved operational efficiency, lower labor
costs, reduced waste and the capture of operational
synergies from acquisitions

-Improved asset utilization – for example, through

reduced inventory levels of soft drinks held in cold
storage and faster turnaround of re-usable transit
packaging in the supply chain
-Regulatory/assurance – for example, through
demonstrating quality by participating in retailer
assurance schemes and assisting trade customers
in achieving full compliance with new traceability
legislation.

3. Market trends and industry challenges

In order to survive in this environment, companies

must consider the market trends that will likely shape
the industry over the next few years. This will help soft
drink companies to understand the challenges they
will encounter and to turn them into opportunities
for process improvement, enhanced flexibility and,
ultimately, greater profitability.

Market trends for the soft drink industry can be

summarized by six fundamental themes:
1-Changing consumer beverage preferences,
featuring a shift toward health-oriented wellness
drinks
2-Growing friction between bottlers and
manufacturers in the distribution system
3-Continually increasing retailer strength
4-Fierce competition
5-Complex distribution system composed of multiple
sales channels
6-Beverage safety concerns and more-stringent
regulations
Consumers turn to wellness and healthy drinks
In much of the developed world, a significant portion
of the population is overweight or obese. This includes
two-thirds of Americans and an increasing number of
Europeans. Consequently, many people have started to
actively manage their weight and change their lifestyles,
a shift that is reflected in their choices in the beverage
aisles:
-Demand has increased for beverages that are
perceived to be healthy
-Energy drink consumption has also climbed, due to
the increasingly active lifestyles of teenagers.

This trend towards healthier drinks has created a number

of new categories, and changed the consumption trends
of the beverage industry as a whole. While previously
dominated by carbonated soft drinks, the industry is
now more evenly balanced between carbonates, and
product categories with a healthier image, such as
bottled water, energy drinks and juice;

While carbonates are still the largest soft drink segment,

bottled water is catching up fast, with an average
of 58 liters consumed annually per capita. Among
individual countries, Italy ranks number one in bottled
water consumption, with the average Italian drinking
177 liters per year. Overall, bottled water represents
the fastest growing soft drink segment, expanding at 9
percent annually. This growth is being partially driven by
increasing awareness of the health benefits of proper
hydration.
The industry has responded to consumers’ desire for
healthier beverages by creating new categories, such
as energy drinks, and by diversifying within existing
ones. For example, the leading carbonated soft drink
companies have recently introduced products with 50%
less sugar that fall mid-way between regular and diet
classifications. Similarly, a South African juice company
has recently released a fruit-based drink that contains a
full complement of vitamins and nutrients.

Beverage companies and bottlers are

conflicting
In the soft drink markets of Europe and the US,
beverage companies use bottlers to package and
distribute products. This structure often causes conflicts
of interest between manufacturers and bottlers.
Nevertheless, the supply chain must consistently deliver
value to the market in order for the segment to prosper.
Despite any dissonance, the concept of “one face to the
customer” must be maintained.

Many factors are contributing to the friction between

bottlers and beverage companies:
Beverage companies often profit from increased
concentrate sales at the expense of bottlers’
margins.
-Beverage companies have historically
had higher returns and lower capital
requirements
-Bottlers have historically had lower returns
and higher capital requirements for building
and maintaining production and distribution
networks
-Bottlers continue to consolidate in an attempt to
offset margin pressure through cost reduction.
Specifically, size helps them to:
-Spread fixed costs over greater volume
-Make larger investments in automated
production lines
-Contain the costs of acquiring new
customers
-Increase customer loyalty
-Declining prices have further reduced bottlers’Margins

-Soft drink manufacturers continue to develop

new products and packaging, which increases
operational complexity and, therefore, expenses for
bottlers.
-More new soft drinks have been introduced
in the last two years by the top beverage
companies than were introduced in the
entire decade of the 1990s. Examples
include: Coke with Lemon, Vanilla Coke,
Dr. Pepper Red Fusion, Pepsi Blue, DnL,
Fanta Berry, SoBe Mr.Green, Sierra Mist,
and Mountain Dew Code Red.
-While manufacturers view these new
products as a way to build a portfolio of
options to hedge against product successes
or failures, bottlers see them as a burden
since they often require additional capital
expenditures.
Retailers’ power continuously increases
With Wal-Mart leading the charge, the world’s
dominant retailers are demanding better service
and shorter order-to-delivery cycles from soft drink
companies. This is dramatically reshaping the industry,
forcing soft drink companies to become more efficient,
while taking pricing power out of their hands. The
dual need for improved supply chain agility and costefficiency
is challenging suppliers to reevaluate the ways
in which they plan and manage their supply chains, as
they constantly search for approaches that will help
them achieve the rock-bottom prices and operational
excellence now expected in the industry.

Furthermore, the growth of private-label products is

encouraging manufacturers to take a number of steps
to compete more effectively. Increasingly, they are
turning to innovation and new product introduction as a
means to achieve real differentiation as well as growth.
Branded manufacturers are also looking to get closer
to the consumer, with many of the larger ones piloting
direct-to-consumer marketing approaches. They are
also trying to better understand the in-store consumer
experience by monitoring the execution of in-store
activities.
Nevertheless, many suppliers are losing brand equity.
In recent years, a couple of factors have been fueling
the growing competition between manufacturers and
retailers:
-Retailers are using their power to set higher
standards for marketing and operational excellence,
including escalating demands for improved service
quality and shorter order-to-delivery cycles from
manufacturers and distributors. Many of these
demands, such as RFID, not only squeeze margins
but also require significant capital investments.
-Because of their direct relationships with consumers,
retailers have a deeper knowledge of consumer
behavior.
Competition is becoming more and more
difficult
In the beverage manufacturing industry, competition is
growing due to the following factors:
-Constant demand for new niche products related
to consumer preferences for healthier and morediversified
offerings
-Industry consolidation, which has significantly raised
the bar for the “scale needed to compete”
-The growth of private-label products.
These competitive pressures have led to:
-SKU proliferation - number of SKUs in a typical
beverage company has doubled from 1991 to 2001
A plethora of new product failures:
-Only 20% are effective
-Only 10% generate significant revenue
-Most fail within the first two years

-Further consolidation and rationalization to

capture cost savings by improving operations and
eliminating redundancy:
-Industry leaders are acquiring small, highgrowth
Companies
-Mid-market players are vertically integrating
-Declining soft drink prices:
-Profitability can only be improved through
greater efficiency in the supply chain or
through more-effective trade promotions,
which usually require considerable
expenditures.
Sales channels are very complex
The macro environment in which soft drink
manufacturers operate has several unique
characteristics:
-Market to consumers/sell to retailers through
wholesalers
-Must have the ability to communicate directly with
retailers
-Multiple distribution channels
-Seasonal demands

manufacturi
nng
product

Wholesale
product

Reta
il
 product
consumer
Sell to Market to
retail consumer

The beverage industry is a multi-channel industry.

Therefore, soft drink companies have several types of
customers with diverse characteristics:
-Modern Trade/Large Chain Retailers
-Greater power in negotiating purchases of
concentrations and merges
-Direct access to the consumer and a
-tendency to protect this relationship from
-manufacturer intrusion
-Request contributions and discounts from
brand companies
-Small Individual Retailers
-Huge number of small point sales
-Sometimes buy products directly through
-cash and carry or modern trade
-Indirect Channel (wholesalers)
-Medium-sized organizations as a
consequence of aggregation through
consortia and merging
-Playing a fundamental role in beverage
distribution
-Possess critical information regarding
individual points of sale in terms of volume,
assortment, presence of competitor’s
beverages, etc.
Due to the complexity of the marketplace, the entire
logistical chain must be able to sustain brands, products
and services coherently within the various channels,
taking into account differing points of sale and
diverse customer needs. Additionally, each beverage
manufacturer must provide customers with an extensive
set of packaging options, including:
-Tracking product in various package sizes
-Special labeling requirements for customers
-International/domestic packaging
- Tracing/recall capabilities.

Statutory regulation is increasing

Governments around the world are concerned about
food safety and quality. Periodically, safety failures
make big news in the global press. Amid this growing
concern, regulators are cracking down on sanitation and
a variety of other food-safety requirements.
While food safety is the major focus in Europe, the
emphasis in the US is more on bio-terrorism and
food security. However, the provisions in the 2005
traceability legislation in the US, which stemmed from
the Bioterrorism Act of 2002, and those in the EU
Directive 178, Articles 18 and 19, are very similar. The
U.S. Food and Drug Administration (FDA) is proposing
the registration and tracking of almost all domestic and
imported food articles, but some are concerned that the
complexity of the rules will overwhelm both the food
industry and the FDA.
Each soft drink company must take these industry
challenges into consideration, as well as its own
strengths and market position, when looking for ways
to drive innovation, accelerate growth and increase
margins. The next section outlines where some of the
most promising opportunities for accomplishing these
objectives can be found.
4. Soft drink industry process
improvement opportunities

Improve customer relationships with Direct

Store Delivery
Branded beverage manufacturers are attempting to get
closer to the consumer, with many larger manufacturers
piloting direct-to-consumer marketing approaches.
These include active monitoring of in-store activity and,
in some markets, a significant move back to direct store
delivery (DSD).
Direct Store Delivery is a business process used in the
beverage industry to sell and distribute goods directly to
the customer’s point-of-sale. With DSD, the soft drink
company gets in direct contact with retailers, restaurants
and pubs and other outlets where consumers can obtain
the product. Manufacturers can use DSD to:

-Make beverage goods available to stores and

customers quickly
-Optimize process settlement in sales and distribution
through complete coverage of the supply chain
-Improve customer retention and build customer
relationships through personal service
-Realize additional sales opportunities
-Obtain first-hand information about the market
-Better position brands against competitors
Ensure product quality up to the point of sale
Best in class DSD companies couple the process of direct
delivery with a cultural change in how they view their
employees and how their delivery personnel operate:
They are not just drivers but they have sales skills,
communication skills and a global view of the company’s
offerings, commercial priorities, and initiatives.
 Direct Store Delivery is characterized by variable orders
and deliveries. Consequently, the process should involve
more than just bringing goods to the point of sale. It
should eventually encompass taking additional orders,
picking up empties, collecting money, and more. Bestin-
class DSD operations typically include many valueadded
activities, such as:

-Merchandising activities - Enables the company to

leverage frequent delivery visits to the point of sale.
These activities include tracking merchandising of
other entities (suppliers, wholesalers, etc.); reporting
on in-store merchandising activities; carrying out
competitive intelligence (competitive products,
product mixes, prices, displays, etc.); and monitoring
store/account execution. May also include some
preventive maintenance.

-Additional sales opportunities - Allows a company

to sell goods “off the truck” without any preceding
order. The mix of products on the truck is
dependent on what is most likely to be sold on a
certain trip. Support provided by handheld devices
enables drivers to skip back-end paperwork and to
close the process through printed invoices.

Enhance relationship with indirect partners

Indirect sales is the process of selling to an end customer
through a third party and tracking that sale as such.
Due to the complexity of the beverage supply chain,
conflicts of interest frequently arise between beverage
manufacturers and beverage distributors:

direct sales
anufacturer
indirect sales

distributer
store

-Soft drink manufacturers profit from increased sales

at the expense of distributors’ margins
-Soft drink distributors profit from positive local
pricing environments, which, if exploited, reduce
volume sales
-Soft drink distributors continue to consolidate in
an attempt to offset margin pressure through cost
reduction
Despite these conflicting interests, it is crucial that
beverage manufacturers and beverage distributors
maintain “one face to the customer.” These companies
jointly market and sell the product in the marketplace,
and close co-operation yields benefits for both parties.
The indirect relationship is a partnership that must be
nurtured by both the supplier and the distributor. The
stakes are high for everyone. For the manufacturer,
a poor relationship with a distributor may cause it to
give a competitor “greater share of mind” in the local
marketplace. For the distributor, a negative relationship
with a supplier means constant threats of contract
termination and reduced marketing dollars spent in the
local market.
A strong manufacturer/distributor relationship is also
important because consumers are becoming more
difficult to capture and classify. It is not only about
sales; it is also about information. But how can strategic
information flow freely between partners? Although
sharing is implied in the word partnership, the reality
is that companies are still uncomfortable about
exchanging strategic information. Nevertheless, it is
critical for companies to share information regarding
sales volume and market intelligence on both the
microscopic and macroscopic levels.
The importance of the distributor’s role in the indirect
channel for beverage distribution suggests that it would
be beneficial to establish a common understanding
between distributors and manufacturers regarding:
-Coding (products, channels, customers)
-Technology
-Data interpretation
-Marketing and sales actions.
In some cases, distributors are small- to medium-sized
companies that only dedicate a few people full-time to
operational activities. As a result of this structure, they
are rarely open to implementing a truly “collaborative”
environment. Recently, however, mergers between
distributing companies, and acquisitions of distributing
companies by manufacturers, have significantly
modified many operating and ownership structures.
Consequently, a few well-structured and managed
distributors have emerged that possess a better
understanding of the value of collaboration. These
distributors have been at the forefront of facilitatingpartnership
initiatives.

Increase sales force effectiveness through

incentives management
In the beverage industry, the critical path to a company’s
success is the effectiveness of its sales force. No matter
how efficiently the company runs its manufacturing
processes, or how well it markets its products, a
beverage company cannot succeed without an effective
sales force that ensures product placement on the store
shelves.

A beverage manufacturer’s sales force typically

comprises 17%-25% of the company’s cost basis.
Beverage distributors have an even higher percentage
of their total costs allocated to their sales forces. Yet,
how can beverage companies get the most out of
their investments and ensure that their sales forces are
operating optimally?

Properly managed commission programs allow beverage

companies to effectively motivate their sales forces
to increase or maintain volume by brand or package.
A commission could be a rebate, discount, or other
payment to a third party or in-house employee. In
order to actively manage sales behavior, it should be
paid when the internal or external sales representative
meets a pre-established benchmark for a tracked metric.
The commission could take the form of either a cash
payment or an item.

While commissions are usually paid based on sales

volume, best-in-class companies take a more holistic
view of commission metrics. Some other important
measures include:
-Account revenue growth
-Profit results
-Number of new accounts
-Customer service metrics
-Account retention.

Manage safety requirements through tracking

and traceability
As recent history has shown, the ability to track
inventory accurately – and to perform a timely and
cost-effective product recall – is critical in the beverage
industry. Inventory items need to be tracked, monitored,
and controlled in different ways and at very detailed
levels. In each individual plant or warehouse, each
resource requires a different level of control/analysis.
Food safety legislation, such as EU Directive 178, impacts
the whole process flow. Traceability is a goal that must
be achieved over the entire value chain, requiring a
batch control system that is able to track and document
all related characteristics.
Activity Type of Questions
Track and inquire on How many kilos of syrup do
inventoryby characteristics
I have?

Record inventory activities “How many different batches

(receipts, shipments, of diet soda do I have in my

adjustments, etc.) inventory?”

Recall products

“What batches will I have to

recall from the retailer?”

Inventorytraceability “What went into a specific

information
batch?”

Answered

At the batch level, it is now possible to assign different

product attributes when searching for the product
including:
-Manufacturing Expiration Dates
-Shelf Life Dates
Classifying production lots into batches allows
companies to identify specific inventory and
automatically record its history, including the history of
the raw materials (and their associated batch numbers)
used in its production. In other words, it allows full recall
of the materials that have been involved in the overall
manufacturing process. These improvements reduce the
company’s exposure to litigation and regulatory fines.
In addition, track and trace improvements help
companies to maintain high quality standards, which is
often a selling point that differentiates one brand from
another and that can command a price premium with
the consumer. Recording and tracking that quality is
critical. In the final analysis, soft drink companies must
strive for the highest quality standards they can achieve
– ones that are superior to those of their competitors.

Optimize the extended supply chain

In a business environment characterized by strong

competition, changing consumer preferences, a complex
distribution channel, and conflicting relationships
between soft drink manufacturers and distributors, the
beverage supply chain is under significant pressure.
Moreover, the world’s dominant grocery retailers
(with Wal-Mart paving the way) continue to demand
increasingly better service quality and shorter orderto-
delivery cycles from manufacturers. This confluence
of factors is forcing manufacturers to become more
efficient, while taking pricing power out of their hands.
The need for both improved supply chain agility and
cost-efficiency is challenging suppliers to re-assess how
they plan and manage their supply chains.

The logistic chain must be able to sustain brands,

products and services cohesively, while taking into
account different channels, customers, points of sale
and customer needs. Accordingly, companies should
consider taking the following steps to improve their
supply chains:
Ensure product availability on-shelf – On-shelf
availability is becoming a critical issue for both
manufacturers and retailers. A system that avoids
out-of-stocks improves consumer value, builds
brand and store loyalty, increases sales and – most
importantly – boosts category profitability. The
traditional practice of filling out-of-stocks with other
products is no longer sufficient – particularly from
the manufacturer’s point of view. If consumers
cannot find the brand they want, their loyalty to
that brand suffers. A 2002 GMA study found that
out-of-stocks jeopardize $6 billion in retail sales
every year. Less conservative estimates put this
figure as high as $20 billion.
Flexible ordering; flexible delivering – Most
retailers are demanding increased flexibility in order
lead-times and delivery methods, putting additional
pressures on the supply chains of manufacturers
and distributors. To withstand these pressures,
companies need to streamline product movement
through programs such as store-specific shipments.
They must also meet the strategies of progressive
retailers, which require flow-through distribution
and cross-docking.
Accurately forecast demand – Properly forecasted
demand drives two of the primary metrics used to
measure the efficiency of a beverage company’s
supply chain: customer service and inventory.
Accurate forecasts are essential to achieving
improved customer service and lower inventory
levels. Even with recent success in developing
and maintaining efficient supply chain processes,
forecasting inaccuracy remains a significant industry
problem. According to the 2003 GMA Logistics
Study, more than one-third of all forecasts are
inaccurate at the national level. This figure jumps
to almost one out of every two at the regional
(distribution-center) level. Meanwhile, at the
store level, differences in store formats and sizes
hamper the forecasting process, and few have
the tools to accurately manage the sheer volume
of data generated by forecasting. Furthermore,
many manufacturers do not have the technology
to properly support their planning and forecasting
efforts. Many manufacturers are still forecasting
sales in months, although their plants run on weekly
plans. That means they have to squeeze weekly
totals out of monthly boxes.
Implement a fully integrated empties
management process – Empties management
is the process of managing returnable containers,
including kegs, CO2 tanks, bottles and crates
(an essential part of direct store delivery). A
successful empties management system gives
the manufacturer a detailed picture of the entire
empties lifecycle, including the location and status
of a company’s assets. This process:
-Lowers costs by controlling high-value
empties assets
-Increases control by managing empties at
customer locations
-Decreases manufacturing issues by tracking
empties.
Reduce time-to-market for new products
An efficient new product development system is
essential in the beverage industry. New products need
to be brought to market quickly in order to capitalize on
changing consumer preferences and competitive threats.
However, new products must be developed tactically,
and the product’s potential must be understood and
analyzed before it hits the market. Currently, success
rates for new products are astonishingly low – dropping
from 75% to 25% in the last decade according to
AMR – and most fail within the first two years after
introduction.

The companies that are best able to execute the

whole product development cycle will clearly have an
advantage. This requires reducing time-to-market as well
as making effective use of scarce internal resources and
improving collaboration with partners. In addition, great
attention must be paid to aligning the related marketing
initiatives (e.g. advertising, sales promotions, etc.) with
the new product introductions.
Innovation is one of the primary growth drivers for
beverage companies, and it can involve changes to the
product itself or to the product’s packaging:

Product innovation – Focuses on providing new

tastes and flavors to demanding consumers.
Packaging innovation -– Emphasizes developing
differentiated packaging according to the
consumption situation. Often, beverage
manufacturers use packaging innovation to increase
product shelf life.
To ensure new product success, beverage companies
must oversee the integration, consolidation and reuse
of knowledge from all involved parties (including
beverage manufacturers and bottlers), from R & D
through production, and down to sales, marketing, and
financials.
By emphasizing greater collaboration and implementing
Web-based workflow, beverage companies can reduce
lead-time from concept to shelf by 25 - 40% and, at
the same time, better integrate safety controls into the
development process.

Increase customer retention through effective

trade promotions
In an environment characterized by strong retailers and
discriminating consumers, beverage companies must
utilize processes and tools to protect their market shares.
To do this, they must make a favorable impact at the
point of sale through promotional activity.
Trade promotions have become a necessary and
expensive cost of doing business. With a sizable
percentage of volume being driven through a smaller
base of retailers, the competition for shelf space has
never been higher. If a beverage company fails to
execute a trade promotion at Wal-Mart, a competitor
will. Furthermore, as trade promotions have proliferated
over the past few years, they have also become more
targeted. In response, beverage companies must create
promotions for specific demographics, channels, and
retailers, which make the sales process more costly and
complex.

Trade promotions vary widely in terms of method,

approach, and structure. Many local promotions are run
ad-hoc with marginal capital investments by field sales
associates, while others require significant investment
and involve pre-scheduling in co-operation with national
chains.
Two of the most commonly used trade promotions in
the beverage industry are coupons and rebates. Coupon
and rebate management are critical to enhancing
relationships between the beverage manufacturer and
wholesalers, customers and, in the case of coupons,
consumers.
Coupon programs, which are in essence trade
promotions addressed to the final consumer, are
mainly executed via discounts at large retailers. The
coupon, a certificate with a stated value, can be applied
immediately or reserved for the next purchase. A
properly executed coupon program enables beverage
companies to pass savings directly to the end consumer.
On the other hand, rebate programs are trade
promotions addressed to the retailer. Therefore,
contractual terms and conditions between the
manufacturer and the retailer must be monitored
and executed. Rebates are often part of special trade
promotions, and management of the rebates typically
follows one of the following flows:
 Bevrage
manufactur
er
Direct
rebate
agreement
custom
er
Figure N - Rebate management in direct sales

order distributor Report sales

deliv
ery
Beverage manufacturer
customer
Billin
g
Indirect rebate ageement
Figure M- Rebate management in Indirect Sales

Improve margins by optimizing the telesales

channel
For a large number of companies in the beverage
industry, telephone sales is the primary method of
order taking and customer interaction. An effective
telesales process can increase revenues and complement
other sales processes, such as DSD and field assets
management. This is accomplished by integrating
the phone sales function with the company’s other
operations.

When correctly executed, inbound and outbound

telesales functionality enables companies to manage
effectively and efficiently all contacts related to sales
and customer services. In addition, it helps build client
relationships, sell new business, and expand and retain
the current customer base.
Well-implemented telesales functionality also enables
business processes to be integrated and standardized.
This effectively “closes the loop,” creating a consistent
experience for customers within a multi-channel
environment.����
Some of the key benefits that a company can gain
through telesales include:
-Revenue Enhancement
-Improved sales effectiveness by
consolidating the customer relationship
-Better up-selling
-Improved cross-selling
-Increased customer retention
-Expanded customer base
-Enhanced competitiveness via services that
match or surpass those of competitors
 -Margin Improvement
-Reduced costs for order processing
-Accelerated sales process
-Lower sales costs in comparison to field sales
-Increased flexibility and speed to market
-Differentiated service levels according to
customer relevance and need.
Implementing closed-loop processes between the
telesales operations and other departments can provide
agents with a comprehensive view of all customer
interactions across the enterprise – in real time. In
order to optimize the telesales channel, agents must
have tools to manage the entire sales process, from
generating leads, planning calls, and prioritizing sales
opportunities and activities, to managing contacts and
placing orders quickly.
5. Solutions for the soft drink industry
In order to respond effectively to changing market
trends and challenges, soft drink companies must
support their improvement efforts with industry-specific
solutions. These solutions should have the following
characteristics and provide the following capabilities:
Basic processes
Pre-configured processes with clearly
defined implementation scope – A streamlined
implementation strategy is necessary to minimize
disruptions to the business while maximizing enterprisewide
adoption. When a world-class solution tailored to
the specific needs of the soft drink industry is coupled
with a rapid implementation approach, it can deliver
immediate business value, generating a high overall
return on investment and a low total cost of ownership.
Manage financials including cost management – An
effective solution must provide an integrated finance
system capable of handling cost management, meeting
internal and external reporting requirements, providing
real-time data access, and drilling-down to greater levels
of detail.

Manage procurement process – Necessary capabilities

for efficient procurement include supporting vendor
price comparisons and flexible pricing processes for
the actual value of the raw ingredients. It should also
support quotation handling, contract management, and
batch handling.
Meet customer expectations for managing Their
Orders – An effective solution should be able to
effectively manage the entire process for handling
customers’ orders, encompassing variable pricing,
delivery, invoicing and payment. It should support
beverage companies in shortening order cycle times,
making on-time and in-full deliveries, and providing
optimal payment methods for customers.
Optimize planning and manufacturing to suit
specific business requirements – Solutions in this
arena should support a multi-step manufacturing
process. This includes the ability to perform automatic
batch determination based on expiration date during
production-order processing.

Provide efficiencies in integrated inventory

management – Integrated inventory management
capabilities are crucial. The system should be able to
automatically update all stock figures after material
movements have been posted. These figures should be
accessible in real-time for decision support.
Manage product safety – As food safety requirements
become more advanced across the beverage industry,
track and trace capabilities are a prerequisite. An
effective solution should have the functionality to find
a defective batch that has already been delivered to a
customer.

Beverage-specific processes
Plan deliveries – Effective solutions feature powerful
tools that businesses can use to efficiently load,
dispatch, and track any number of deliveries. An
emphasis should be placed on eliminating redundant
trips and matching the appropriate vehicles and drivers
to customers for each delivery. By extending route
management into the order management system,
companies could reap potential cost savings of 25% to
50%.
Monitor route business – Beverage companies must
be able to account for every item delivered, and take
quick action to resolve item discrepancies. Best-in-class
solutions provide powerful check-in and check-out
functions that record all deliveries and returned goods.
They should also provide tools to monitor quickly and
accurately the entire transportation operation, or that of
a transportation supplier, from loading and delivery to
accounting and settlement of returned goods.
The system as a whole should ensure complete loads,
on-time deliveries, solid inventory control, and seamless
invoicing.
Keep track of empties – Best-of-breed beverage
industry solutions paint a detailed picture of the entire
empties situation, showing the location and status of
crates, kegs, or pallets, and helping optimize return
logistics. It should also permit quick access of each
customer’s empties account as well as print delivery
notes or invoices recording the empties involved in a
delivery.
Manage rebates and bonus agreements – Rebate
and bonus agreements are critical to enhancing
relationships among beverage manufacturers,
wholesalers and customers. Yet, the task of managing
rebate programs is becoming increasingly difficult
as current rebate arrangements often involve
numerous parties, including many that are not directly
involved in the initial transactions. Effective beverage
solutions provide companies with the tools needed to
manage easily and accurately large, complex partner
constellations with any number of bonus or rebate
arrangements. They should also provide coupon
management. These functions apply both to direct and
indirect customers.

Manage commissions – In the beverage industry,

complex commission structures are needed to motivate
the sales force and to encourage them to push certain
brands and to develop specific markets. Best-in-class
solutions allow companies to complete commissionbased
transactions, make payments both to internal and
external sales forces, and track the payment of these
commissions over time.

6. Conclusion

The relative market share of the soft drink sub-sectors

(carbonates, juices, bottled water, energy drinks) vary
widely across Europe, America and Asia due to the
differences in consumption habits, brand awareness
and lifestyles. On the aggregate, the total value of soft
drink consumption is expected to reach about $347
billion USD by 2006. Despite its size, annual growth is
often limited to increases in the world’s population base,
especially expansions in the middle-class. In mature
markets, such as North America and the European
Union, where population growth is limited, achieving
real profitable growth requires specific strategies for
truly differentiated business performance.

While all beverage businesses start from different

baselines, there are common themes in their potential
paths to success:
-Better understanding the consumer – Beverage
and related businesses will need to keep an eye on
fast-moving changes in consumer requirements.
Growing consumer expectations for quality and
variety, more diverse populations, and rising
concerns over beverage safety will require firms
to introduce new products targeted to more
specialized markets and to rethink their production
processes and supply chains.
-Effective innovation and new product introduction
The ability to respond with agility to changing
customer and consumer demands is essential, and it
must be accomplished via the introduction of new
products and formats that are successfully planned
and executed. This represents the largest single
opportunity to drive profitable growth.
-Closer customer relationships – As retailers
rationalize their supply base across all product
categories, beverage companies will need to work
more closely with a smaller number of customers,
each of whom represent a growing portion of their
business.
-Operations Excellence – An agile, cost-effective
supply chain is vital to the success of a modern
beverage company. Requests from the trade for
outstanding service quality and reduced order-todelivery
cycles are challenging suppliers to re-assess
their approaches to planning and managing their
supply chains. Ensured product availability, delivery
flexibility, and improved forecasting are the most
important elements for success in the beverage
aindustry.
-Actionable information to manage the business
Examining accurate and timely data about sales
and consumer behavior allows companies to gain a
true picture of product and customer profitability.
This provides the foundation upon which to make
good management decisions and to take the proper
actions in the market.
Companies that can successfully address these issues
will be those that prosper. The key to managing these
challenges, and ultimately to driving profitable growth,
lies in designing and implementing effective processes
and supporting them with a flexible, integrated
information system capable of meeting the distinct, and
constantly evolving, needs of the soft drink industry.

Reference

 www.pepsico.com
 www.pepsiworld.com
 www.adexindia.com
 www.//en.wikipedia.org/wiki/pepsi-cola
 www.cocacola.com
 www.pepsizonemusic.com
 www.pepsi.com/home.php
 www.pepsiarena.com
 www.kotlermarketing.com
Company details: Records of PepsiCo.

Brochures.

Files.

Philip kotler – Marketing book

 Analysis and Interpretation

1. How many members are their in your family.

A- 0%
B- 8%
C- 22%
D- 30%
E- 40%
1. How many members of your family drink soft-drink.

A- 5%
B- 10%
C- 15%
D- 30%
E- 40%

1. Among the following drinks,which one you prefer the most.

A- 20%
B- 25%
C- 40%
D- 15%
E- 0%

1. Which one among the following you prefer to buy for your
family.

A- 0%
B- 5%
C- 15%
D- 38%
E- 42%

1. When do you consume soft drink ?

A- 25%
B- 20%
C- 45%
D- 10%

1. Will you buy soft drinks,if available at your door step.

A- 0%
B- 100%

1. Among the following promotion schemes , which five you

prefer the most.

A- 20%
B- 25%
C- 8%
D- 32%
E- 15%
F- 0%
G- 0%
H- 0%
I- 0%
1. Among the following , which one is best door to door delivery
channel of pet pls rank.

A- 20%
B- 26%
C- 38%
D- 16%

1. What do you think , soft drink industry is making use visual

merchandising to increase their sales.
 A- 35%
B- 30%
C- 15%
D- 20%

1. Are you aware of all products of pepsico.

A- 100%
B- 0%
 CONSUMER QUESTIONNAIRE

(1)How many members are there in your family?

(a) One (b) Two (c) Three (d) Four (e) more than four

(2) How many members of your family drink soft-drinks?

(a) One (b) Two (c) Three (d) Four (e) more than four

(3)Among the following drinks, which one you prefer the most?

(a) Pepsi (b) Coca-cola (c) Fruit juice (d) lemon juice (e) Others

(4) Which one among the following you prefer to buy for your
family?

Plz. Rank as per your Choice.

(a) 200 Ml. Glass Bottle ( )

(b) 300 Ml. Glass Bottle ( )

(c) 500 Ml. PET Bottle ( )

(d) 1.5 Lts. PET Bottle ( )

(e) 2 Lts. PET Bottle ( )

(5) When do you consume soft drink? Please rank the following.

(a)At the time of watching TV ( )

(b) With the meal ( )

(c) When you go out for movies ( )

(d) Whenever you feel like consuming it ( )

(6)Will you buy soft drinks, if available at your door Step?

(A)no

(b)yes

(c)if no then why

(7) Among the following promotion schemes, which five you

prefer the

most?

(a) Coupons (b) premium (gifts) (c) Price off (d) Prizes

(e) Samples (f) Cash refunds (g) Co-Branding (h) free liquid

(i) any other

(8) Among the following, which one is the best door to door
delivery

channel of PET please rank?

(a) Vegetable vendor

(b) Hawkers

(c) The milk man

(d) Others (please specify)

(9) what you think, soft drink industry is making use of visual
merchandising to increase their sales?

(a) excellent

(b) very good

(c) good

(d) fair

(10) are you aware of all product of pepsico?

(a) yes

(b) no

(c)if no then why

(11)give your comment

Personal Details

Name :

Age :
Qualification :

Address :