Pepsi Sets The Pace For Backward Integration Of Tropicana

New Delhi: | Updated: Jan 28 2003, 05:30am hrs
As a first step towards backward integration for its pure juice business Tropicana, PepsiCo India Holdings is now foraying into contract farming of citrus fruits like oranges and keanu. PunjabJallowal, to be precisehas been chosen, yet again, as the location for the project which will be inaugurated by the Punjab chief minister early next month.

...As Business Becomes Profitable

PepsiCo India claims to have made its pure juice business Tropicana profitable now. Tropicana operations have broken even this year and we are making a decent net profit, PepsiCo India Holdings chairman Rajeev Bakshi told the FE.
Pepsi also plans to give its juice brandwhich has seen many hurdles in the nascent and niche juice marketa renewed thrust in the coming days. A price revision of the brand is also on the anvil, Mr Bakshi indicated.
Tropicana business which was earlier being run under a separate company called Tropicana Beverages Comp-
any under the direct control of its country head Mr Abhay Manglikwas integrated with PepsiCo in 2001. The changes happened in the wake of merger of the cola majors three international beverage unitsPepsi-Cola International, Tropicana International and Gatrorade Internationalinto one single new company PepsiCo Beverages International (PBI).
Tropicana now operates as a functional beverages division of the cola major, and is headed by Mr Subroto Chattopadhyay. Mr Manglik, has since been posted to Washington to PepsiCos snack arm company Frito
Lay.
Currently, in terms of market share, Tropicana is believed to trail behind rival Real (from the Dabur stable) which claims to have a 55 per cent market share of the estimated Rs 100-crore branded juice market.
Meanwhile, Pepsis arch rival Coca-Cola India is believed to be working overtime to get its natural juice brand Minute Maid in the country. The company plans to launch the brand around July 2003.

The three-phase project involving trials, nursery and contract farming, is being pursued jointly by Pepsi and the Punjab Agro Export Corporation.

Though in its infancy at the moment, the project vision, however is about seven years, according to PepsiCo India executive director, exports and external affairs Abhiram Seth. If successful, it can put Punjab and India on the citrus map of the world. Apart from that, it would mean 100 per cent localisation of orange juice and Pepsi becoming the supply center to other regions, Mr Seth said while speaking to FE.

In the first phase, Pepsiwith technical help and expertise of Tropicana Coplans to import processing-focused citrus variety from multiple sources like California, Florida and Brazil into Jallowal, Punjab. These varietiesthe first lot of trees is arriving in a months timewill be then monitored in a 10,000 sq ft screening house or a quarantine facility which has been developed by Pepsi.

Based on the response, this will be followed by setting up a facility for nurseries and gradually five to six demonstration sites will be set up from where seeds will be given to farmers. Typically, this should happen in three years period. And if things are propitious, then processing facilities should begin within five years, Mr Seth said.

Pepsi, Mr Seth, said is not investing much at the moment except in the quarantine facility and technical know-how. Its largely a Punjab government initiative, he said. He, however, added that the long-term objective is to go for contract farming.

Tropicana juicesavailable in orange, apple, grape variantsare currently imported in a concentrate form which are later reconstituted at a plant in Baramati, near Pune, and vacuum packed into Tetrapaks after paying an import duty.

Pepsi is already involved into contract farming of potatoes, tomatoes, groundnut and chillies. Its export turnover is nearly about Rs 350 crore.