"The name of the game is expansion"

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: She’s extremely cagey about numbers. But on everything else, Punita Lal, executive director, marketing, PepsiCo India, comes across as a reporter’s delight. That’s not entirely surprising considering that prior to joining Pepsi, she happened to cut her teeth with two major advertising agencies, Lintas (now Lowe) and HTA (now JWT), where she handled a slew of difficult-to-please blue-chip clients and devised communication strategies for many an iconic brand, moving on for a short stint with Coca-Cola before switching jobs—and loyalties—to rival coal major, Pepsi in 2005. In a candid interview to FE’s Radhika Sachdev, she shares her plans for PepsiCo at a time when cola’s share in the overall beverages market is shrinking the world over, although not in India.

It’s difficult to miss a very tight fit between Aamir Khan and Coca-Cola, a fit that was missing when Aamir endorsed Pepsi, a long time ago. Please comment.

As a matter of principle, I don’t like to comment on rival brands. But if you are posing it to me as a general question on star endorsers and their fit with a particular brand, I must confess that as a marketer, I don’t, as a rule, look for salience from an endorser. I don’t want a celebrity to be so overwhelming that it completely overshadows my brand. You would have experienced people saying, “I remember that ad... but I can’t remember the product!” Well, we won’t let that happen to Pepsi. It’s a brand so firmly entrenched in the consumer’s mind that it would only look for a close fit—not salience—which incidentally, we do have with Shah Rukh Khan and others Pepsi endorsers.

But hasn’t this whole positioning—Pepsi as a bratty, irreverent brand—become a little outdated when our youth is becoming more team-oriented, structured and sure of their place in the world?

You’ve said it. You are talking Pepsi’s language now. That’s indeed the credo of “Pepsi youngistaan” our new campaign with Ranbir Kapoor and Deepika Padukone (it also has SRK) where the youth is shown as feisty, self-confident and where “sab kuch hai asaan” (everything is easy). As for structuring, it’s not the youth that is getting more structured, but we as marketers who have to be more structured in understanding their psyche. Look at the way they laugh at themselves. Honestly, how many of us have the courage to do that? Pepsi as a brand tries to emulate that attribute of the youth.

What would be more important for a cola brand—advertising or marketing?

That’s a tough poser. And, the answer would vary at different points in a brand’s lifespan. Can you choose between communication and packaging? A case in point is the Pepsi slim can—the same product but in a different pack. It was introduced because we saw a need for it—a need for affordability, so it is priced at Rs 10. Distribution would also be part of my marketing mix, but I don’t really need to talk about it, or do I?

To reiterate a point I made earlier, a brand as definitive as Pepsi does not need to be defined by a particular face or a campaign—that’s the positioning of this brand and we are staying with it.

World over, the cola market is shrinking rapidly. It’s yet to happen in India, though the early indications are there. How do you plan to offset this change in beverage preferences? By shifting the focus to your health drink portfolio?

That and also by focusing on the overall mix of carbonated and non-carbonated drinks. This we hope will stabilise as the market matures.

The next challenge would be to ensure that we keep widening the Pepsi portfolio to answer a higher level of the beverage need state. Right now, carbonated drinks are sold mainly on the taste and refreshment premise. The next stage would be reaching out for a drink for a feeling of wellbeing, social status or nourishment. We would have to engineer our product solution to fulfill all these needs and more. We would have to ensure a confluence of various things to grab a bigger share of the throat’ with the result that when someone reaches out for a beverage, I have to make sure it is mine. It could be anything, lime or clear lime, that’s really immaterial.

That said, although the cola market is growing slower (10% per annum) than the fruit juice market (about 20%), you must also look at the size of the category. Right now, its just one-tenth of the cola market. But it has the potential to grow bigger.

What’s the response to your bottled water brand Aquafina?

The response is good, but the problem with this category is that water is still a commodity and highly discounted. What need can you satisfy with water? So you can’t charge a premium for it because people won’t pay it. Later, when the category evolves someone could come out with better packaging, claims that the water is drawn straight from mother earth, but all that might take another four-six years. At present, the growth is in low teens.

What are you doing to make the sleeping giant—India’s rural market—awaken? Is it not possible to siphon off a portion of resources from the shrinking cola market to the rural market? What became of the Rs 7 Pepsi?

When you siphon, you have to siphon to the next level. That would be mini metros. At the moment, the name of the game is beverage portfolio expansion in the metros, category maximisation in mini metros and setting a distribution network in the hinterland. Distribution remains the biggest challenge in rural India. The Rs 7 Pepsi has now become the Rs 8 Pepsi.

The proposition was unsustainable at that price, even with the affor-dability index rising.

The pesticide controversy is history. With the benefit of hindsight, what would you have done differently to deal with the crisis? Would you have ordered a product recall on a scale that Nokia did?

No, there was no need for product recall as the pesticide levels were not of a significant level. The only mistake we made is not talking to our customers, as effectively as we did in the second round.

In retrospect, silence can be deafening in such a scenario. We should have educated the consumer in the scientific area in the very first round. But we were taken off guard. We had so much confidence in our product, it became a game of perception versus reality. In the end it didn’t really matter what was the reality.

From seeking celebrity endorsement, iconic brands often move to issue-based advertising. When will Pepsi grow up and move in that direction?

We already have—with Aquafina. As a corporate, we are committed to giving back the water we consume. The beverage industry as a whole consumes very little (0.4%) of the 7% consumed by all industry, but even then, at all Pepsi plants, we have started programmes for water recharge, rain water harvesting etc. All 35-odd Pepsi plants are zero-water balanced today and in the three years since this programme was launched, we have managed to save two billion litres of water. That’s a huge opportunity saving.

What’s next in the pipeline?