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Pepsi expects sales to fizz with apple drink

Priya Ganapati in Bombay

Unseasonal rains and a general slowdown in the economy have impacted the soft drinks segment greatly this year. The carbonated drinks sector is expected to post a growth that is significantly lesser than last year.

India's southwest monsoon, which arrived in southern India a week ahead of schedule is keeping up its momentum and is likely hit the northern region at least seven days early, a weather official said on Tuesday.

While this may be good news for the agricultural industry, for the cola giants it means fewer bottles sold and in turn a softer rate of growth for the carbonated drinks industry.

"There has been a general slowdown in the industry this year. This has partly been because of the markets being soft and also due to the unexpected rains which means a shorter summer and less consumption of soft drinks," admitted Subroto Chattopadhyay, executive vice-president (marketing), Pepsi Foods Limited.

But despite the slowdown, the cola market is set for action. On Wednesday, Pepsi launched Mirinda Apple, an apple flavoured carbonated soft drink.

The drink is priced attractively at Rs 6 per 200 ml. Pepsi hopes that the cider flavoured drink will expand the cola market and generate new revenues from hitherto unexplored segments.

The Indian soft drink market is divided into cola and fruit flavours.

The biggest brands in the cola segment are Pepsi, Coke and Thums Up.

While in fruit flavours, orange and cloudy lemon are the most popular.

Cola drinks are estimated to have approximately 55 per cent of the market share while fruit flavors take the rest. A small percentage also belongs to fruit drinks like mango-based Maaza or Mangola, which is growing at around 25 per cent.

The market share of non-carbonated beverages is estimated to be insignificant. "Fruit juices have not grown much. But yes, mineral water is something that has grown significantly over the last two to three years. Its growth rate is pegged at about 35 per cent," Chattopadhyay says.

But with the apple flavoured fizzy drink, Pepsi hopes to nurture and grow a market where there is none currently.

"With its unique apple flavour, refreshing and full-bodied taste the Mirinda apple is targeted at young consumers. The brand Mirinda Apple flavour will be extended across India, leveraging the novel concept of a carbonated apple flavoured drink. We are looking to expand the market," Chattopadhyay says.

Though apple based drinks have not been received enthusiastically by the Indian audience till date, PepsiCo hopes to change the rules of the game by expanding a non-existent market. Appy, the apple drink, launched by Parle Agro in 1989 failed miserably.

But many believe that while the flavour did take off among the public the product was overshadowed by its richer cousin, the mango-based drink Frooti.

While Parle Agro did try to re-launch the product in 1999 as Yo Appy to give it a more youthful feel, Appy still could not secure a footing in the market.

Chattopadhyay is confident that Miranda Apple will buck the trend. "We have done a considerable amount of research and found that the cidery apple flavor that we have introduced is much liked by the consumers. We are confident that we will make it and we will succeed," he says.

But it is not going to be an easy ride for Miranda Apple. Coke is rumoured to launch its green apple flavoured carbonated soft drink soon.

Explaining why Pepsi chose to launch Mirinda Apple towards the fag end of the season Chattopadhyay says, "Between the months of March and July, our supply chain management is at its busiest. You cannot get their time and attention since it is more important to get what we produce to the markets. So we always choose to launch towards the end of the season."

Mirinda Apple is currently available in Bangalore, Madras and Bombay. It is expected to be launched in Delhi soon.

Over the last five years, the soft drinks segment has been on a roller-coaster ride. A severe slump in 1997 caused by economic slow-down and aided by a trucker's strike saw Coke recording an annual growth of only 5 per cent.

The overall market then grew by a sluggish 12 per cent but the next year proved to be better when cola companies logged over 50 per cent growth rate.

Last year proved to be boom time and the soft drink market grew impressively but now its back to square one.

"The growth this year has been significant but not as much as last year. But it is still significant. The only thing is that when as a company you have been around for ten to twelve years a growth rate of 18 to 20 per cent does not appeal anymore," confesses Chattopadhyay.

But for now, the round one still goes to Pepsi.

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