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Pepsi sees greater synergies after Quaker Oats buyout 

Our Marketing Bureau  
New Delhi, Dec 5: Even as PepsiCo Inc's acquisition of The Quaker OatsCompany has accelerated leadership changes within the group and provides thesoft drinks major with several key strategic and economic benefits, theacquisition is unlikely to have any immediate impact on its Indiaoperations.

However, the Indian subsidiary - Pepsi Foods - does see synergies acrosssnack portfolio and potential in its breakfast cereals. "We see a lot ofsynergy in snack foods," said the company spokesperson, while adding that itwas too early to comment.

Quaker's rapidly expanding snack business - including granola bars, ricesnacks and fruit and oatmeal bars - is highly complementary to PepsiCo'sFrito-Lay unit, the world leader in salty snacks. The Quaker brand willextend PepsiCo's reach into morning on-the-go meal occasions, snacks aimedat kids and grain-based snacks. "Distributing Quaker's snacks throughFrito-Lay's vast distribution system will create very substantial growthopportunities both in the US and internationally," a statement issued byPepsiCo noted.

In India, Pepsi's snacks foods company - Frito-Lay India - has already astrong foothold in the Rs 1,600 crore salted snacks market particularly withits recent acquisition of Uncle Chipps brand. Frito-Lay India is presentthrough its three brands - Lays, Cheetos and Lehar.

The company claims to have a 65 per cent market share in the Rs 100 crorebranded potato chips market. Uncle Chipps, the market leader about threeyears ago, has now just about 30-35 per cent market share. On the beveragesfront, Quaker's powerful Gatorade brand, the world's number one sportsdrink, will make PepsiCo the clear leader in non-carbonated beverages, thefastest growing sector of the beverage industry. In India, however, it isunlikely to be introduced soon, simply because the market for such nicheproducts is almost negligible in the country.

Quaker's non-snack food business (with leading brands like Quaker Oatmeal,Life and Cap'n Crunch cereals, Rice a Roni and Aunt Jemima syrup) is alsohighly profitable.

"Combining PepsiCo and Quaker will create a company with an exceptionallystrong position in the rapidly growing market for convenient foods andbeverages. The combined company, which will retain the PepsiCo name, willhave pro forma revenues of $25 billion. Its expected market capitalisationsof more than $80 billion will place it among the world's five largestconsumer products companies,'' a statement said.

Meanwhile, in her new role as President and CFO, India-born Ms Indra Nooyiwill be responsible for corporate staff functions, including legal, humanresources and corporate communications, in addition to her current CFOduties overseeing finance, strategic planning, mergers and acquisitions,information technology, advanced technologies and procurement.

"Indra's contributions to PepsiCo have been enormous and she will make agreat president," Mr Roger A Enrico, PepsiCo chairman and CEO said in astatement. "She is a terrific addition to our world-class board and herperspective will be invaluable".

Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.

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