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Transcript of BIAC Final Deck
Disclaimer for Become Indra’s Advisors Contest
• This presentation (‘Presentation’) has been prepared by PepsiCo. India Holdings Pvt. Ltd. (‘PepsiCo.’) collectively, with any officer, director, employee, advisor or agent (‘Preparers’) for Become Indra’s Advisors Contest (‘BIAC’).
• This Presentation is exclusively for the purpose of guiding the persons registering themselves for participating in BIAC (‘Participants’) and no commercial purpose is intended.
• This Presentation and the information, data, figures, pictures, projections, estimates, forecasts, analyses etc. (‘Contents’) contained herein are confidential and shall strictly be used for the purposes of BIAC and shall not be reproduced, copied, disseminated or distributed in any manner.
• While the information contained in this Presentation is believed to be accurate, the Preparers expressly disclaim any and all
liability for representations or warranties, expressed or implied, contained in, or for omissions from, this Presentation or any other written or oral communication transmitted to any Participant in connection with this Presentation so far as is permitted by law.
• Neither the Preparers nor any of their respective representatives shall be liable for any direct, indirect or consequential l oss or damages suffered by any Participant or any person as a result of relying on any statement in or omission from this Presentation, along with other information furnished in connection therewith, and any such liability is expressly disclaimed.
• In furnishing this Presentation, the Preparers reserve the right to amend or replace this Presentation at any time and undertake no obligation to update any of the information contained in the Presentation or to correct any inaccuracies that may become apparent.
• This Presentation shall remain the property of PepsiCo and the Participants shall promptly delete all the Contents received i n written, electronic or other tangible form whatsoever after their participation in BIAC is completed. Such deletion shall be certified to PepsiCo by the Participants via email to the following email address: [email protected]
• All trademarks as depicted in the Presentation remain property of their respective owners, and are used only to describe the products being provided under such trademarks. The depiction in no way indicates any relationship between PepsiCo and the owners of said trademarks in any manner whatsoever.
• Neither the dissemination of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Preparers or any of their respective affiliates to enter any contract or otherwise create any legally binding obligation or commitment. The Preparers expressly reserve the right, in their absolute discretion, without prior notice and
without any liability to any recipient to terminate discussions with any recipient or any other parties .
PepsiCo Confidential 2
Ghar ke Baahar bhi
Maximizing Out of Home Eating & Drinking Opportunities for PepsiCo
As the year draws to a close, there is much excitement in the PepsiCo office. It is that time of year when plans are made for the next year, and senior leaders in the company are making choices – where should we resource ahead of the curve?
India is an exciting market, and has always been a key focus area for PepsiCo. Among the many exciting opportunities present, one of those that is being discussed more often these days is the exciting out of home arena.
Globally a huge business, this is now finally taking shape in India too. The buzz around this is evident, as seen by the number of people consuming some beverage or snack while out on the streets or restaurants and malls!. Clearly, there is something here that merits serious attention and resourcing!
Inviting India’s brightest young minds to help PepsiCo India make the most of this opportunity!
PepsiCo is waiting to hear from you!
PepsiCo Confidential 4
The question you are invited to help us answer
How should PepsiCo India participate in the rapidly expanding business opportunity provided by increased out-of-home
eating and drinking?*
What is the best end-to-end business solution to monetize our brand and equipment assets, to ensure we gain on every front viz.
• Volume & Value
• Profit
• Equity
• Partnerships
*also referred to as On Premise(OP) or Foodservice (FS) within the industry
PepsiCo Confidential 5
CONTENTS
1. The opportunity
2. Key insights, trends, information data-bank • Consumer
• Customer
• Pepsico
3. Best practice case studies - inspiration
4. What we expect from you
5. Appendix • About Pepsico
• Business fundamentals
PepsiCo Confidential 6
1. THE OPPORTUNITY
Young On-the-Go lifestyles seek food & drink on the move
More young people on the move –
students, working women, working men populations increasing
significantly
Urbanization, personal mobility and longer commutes means
time starved people want to eat and drink
on the move
OPPORTUNITIES: Packaging
(convenience, fresh, cool etc…)
Ready to Eat Ready to Cook/Half Cooked
PepsiCo Confidential 8
Cafeterias
(Workplace, Healthcare, etc.)
Restaurants
This has spurned over a trillion $ food service industry! Globally, Food Service comprises a mix of channels serving almost 50% of
FB consumption occasions,
All Out of Home Channels
Welfare & Services
Hospitals
Vending
FSR
QSR
Pubs/bars
Cafés
Takeaways Nightclubs
Hotels & lodging
Street & mobile vendors
Retail Leisure
On-board
Education
Workplace
Global FS sales (manufacturer)
40-50%
Airports & Hotels
Sports Stadiums
Recreation Parks, Movie Theaters, etc.
Education (Schools University)
QSR=Quick Service Restaurant; FSR=Full Service Restaurant; FB= Food & Beverage
PepsiCo Confidential 9
Business and Institutions
Travel & Lodging Entertainment Eateries & Dining
In India, too the Food Service footprint is large, varied & growing
Cafes & Bars
FSR
QSR
Kiosks & Food courts
College/Univ.
Workplace
Govt & Military
Catering & Social Services
Hotels
Travel
Clubs/Bars
Theme Parks
Cinemas
PepsiCo Confidential 10
A platform to build both revenue and brand equity
Large and Growing Volume Growing faster than retail since the
last 3 years in India, and globally too
Drives Beverage & Snack Adoption
Compared to home, consumption of specialty beverages are higher and consumption of snacks as a
meal replacement are higher
Unique Access to tough-to-reach consumers
Has higher per capita trips than retail among a core target – youth,
working men, upper SECs
Drives Brand visibility and equity
Allows controlled quality brand activations in the “right” mood and
environment
SEC= Socio Economic Classification
PepsiCo Confidential 11
In India, PepsiCo’s On Premise Sales have had a great run over the last 5 years…
Volume Growth Hi Double Digit
CAGR
Share Growth
Urban Advantage >10% Volume Mix &
Growing!
Regular Brand
Activations
ON PREMISE CHANNEL LEADERS
PepsiCo Confidential 12
QSRs and T&L most important channels for beverages today… and tomorrow!
Contribution
2012
43%
10%
4%
21%
10%
11%
1% Others
QSR
FSR
Retail Café/Bar
T&L
B&I
Ent’t
The top contributors to growth 2012-2016
Tier 1 growth drivers
1. QSR
2. T&L
Next level growth drivers
1. Entertainment
QSR- Quick Service Restaurant; T&L- Travel & Lodging, B&I – Business & Institutions
PepsiCo Confidential 13
Led by key accounts who will drive growth
Acceleration of growth in QSR’s
Travel & Lodging growth through new development
Rapid growth through Cinemas
Market leaders strengthening their share of T&L
Global QSR key accounts expanding rapidly
Cinemas dominated by key players
• Room nights set to double over next 5 years
• Number of multiplex screens to double by 2018
• Rapid growth in regional cities
• TAJ and ITC to contribute to significant portion of the total growth
• PVR and INOX becoming more dominant, acquiring smaller National operators
• Top 5 Global QSR’s contributes 85% of growth
• Outlet growth of 20% per annum
Source: Euromonitor
PepsiCo Confidential 14
Channels provide different benefits to PepsiCo
‘13 ‘17 (MM) 8 oz - Branding +
- P
rofi
tab
ility
+
Cinemas
Hotels Vending
Railways Institutions
FSRs
XX
X
X
X
Airports
X
XX X
X
QSRs/Food Courts X
X
X
X
X
X
*size of the bubble indicates volume
PepsiCo Confidential 15
And gives us new opportunities to grow for Food Service
Day Part Portfolio
FACT #1 80%+ of business from Morning & Evening
Breakfast Morning Evening Snack
FACT #2 Huge Mix of CSDs for PepsiCo
FACT #3 75% of industry sales is from foods
75% 76%
54% 73%
Grow beyond morning & evening
Grow beyond CSDs
Grow beyond beverages
PepsiCo Confidential 16
Customized Pack Solutions that provide convenience, portability, and competitive pricing
An example of how we can make the most of the channel opportunity…
Differentiated portfolio based on location/occasion within Lodging channel
Breakfast
Vending Solutions
Event Catering
• Drive Quaker Breakfast meal solutions • 100% premium juice offerings
In Room
Fitness Center
Restaurant /Bar
Gift Shop Peanuts/Snacks
Lays Stax - Minis
Water - Cups
CSD 150ml Cans
Quaker Inst. Oats
Quaker Cookies
Lipton
Trop Tetra 200ml
• Represents up to 60% of total Beverage sa les
• Explore low-cost Water option • Penetrate distribution on Salty
Snacks and Quaker Cookies
• Broaden Gatorade and G-Series trial
• Introduce Premium Water brands • Development of Pepsi Hi-Image
contour bottle • Drive Mixology range – chef-led
recipes and innovation
• Introduce high end coolers to drive impulse purchase
Travel Lodging
Source: US Travel & Lodging Fact book 2012
PepsiCo Confidential 17
The way to think about this opportunity: 3 Lenses Examine the WIFM* for each of the 3 key players
CONSUMER PI BRANDS/ EQUIPMENT
CUSTOMER
SWEET SPOT
Who is he? What’s his life like?
Where is he?
What is he doing there?
What is he looking for from the occasion/channel?
What is the interaction with our categories today?
What brings customer footfalls, increases revenue per customer?
What is the role of our category in their portfolio?
How do we give them a Competitive advantage?
How can we ensure best Service?
How do we build brand visibility and equity in a unique and impactful way?
How do we innovate around equipment to satisfy consumer and customer needs in a way that ensures profitability and gains us a competitive advantage?
What is the role for culinary innovation? How do we design and implement against this?
*WIFM: what’s in it for me
PepsiCo Confidential 18
2. KEY INSIGHTS & TRENDS The Consumer
Global trends show high potential for India
Frequency Of Eating Out Is High In The Developed World; Translating Into Huge Potential For India
Key drivers of beverage adoption are hanging out with friends and visiting your favorite restaurant
Source – Annual visits, Foodservice - NPD/Crest June 08, Retail - IRI Panel (Q308)
Annual Per Cap Trips
Huge Eating Out potential in India
8%
8%
17%
23%
26%
Entertaining Advertising
Drinking at the Mall
Going to the Movies
Favorite Restaurant
Favorite Hangout with
Friends
Drivers of Beverage Adoption*
220
121
40 26 15 15
Total FS QSR FSR C&G/Ent Grocery Super Club
1.2
42
India Singapore
Eating Out Retail
PepsiCo Confidential 20
Supported by key indicators already evident in India
PepsiCo Confidential 21
Consumers are more emotionally connected here
Foodservice Retail
With Friends Spontaneous Alone Routine
Relax & connect
Savor the time 45 minutes plus
Chore
Get it done Complete in < 20 minutes
Consumer Shopper
Environment
Emotional Framework
Decision Maker
PepsiCo Confidential 22
Afternoon-Evening and social gatherings are a natural affinity for LRB
WHERE – Significant In Home play but OOH is a strength ; High consumption
while relaxing
• Packaged Beverages & Soft Drinks over-index on out of home consumption 3-4 times vs. Average beverage consumption (which is mostly in home)
• Over 60% of beverages consumption happens during leisure/relaxation time
WHEN – LRB consumption mostly during non-meal occasions
• Over half of soft drinks consumption happens in the afternoon/evening (between lunch & dinner), & another 1/5th happens in the morning (between breakfast & lunch)
• But other packaged beverages have a more even consumption profile through the day
– 1/3rd in afternoon/evening
– 1/3rd at breakfast/morning
– 10-15% in mid morning
– 10-15% post dinner too
PepsiCo Confidential 23
And freshly-prepared food forms the core of what these food services deliver
PepsiCo Confidential 24
Our core consumer for this opportunity is…
Consumers who eat and drink outside home, and are positive to our categories are more likely to be: • Male & Female
• Younger (<35 years)
• Urban, from larger town classes
• Newly-working and students
• Across all SEC groups, but those who frequent organized E&D outlets come from upper SEC
PepsiCo Confidential 25
Some key insights about our core consumer
1. Relationships are changing Need to deliver shared experiences
• Nuclearization of joint families- less time for extended families, higher cost of living together in urban
• Hidden cost of nuclearization- no emotional anchors
• Friends are the new family- Fun is New Experiences with friends
• Reduced power distance with celebrities
2. Self as a Project Need to help build social & evolving identity
“I’m a Rapper, Social Media Expert, Lyricist, Musician” Harshit, Roadies Introduction
PepsiCo Confidential 26
Some key insights about our core consumer
PepsiCo Confidential 27
3. MONEY, TECH, BRANDS Need to deliver individual progress & success
4. Digital Native Need to provide tech solutions
MONEY is an absolute must, I will only go after something (a
profession) if there is big money in it!
It is best to buy famous brands, not only
because they are good quality but they also say something about who you are in society
Today if you were to see any graphic or poster in my room, I would have either found it online or created it
myself on either Photoshop , Picasa.. I can create things which I personally identify with and have it
with me
5. Health & Wellness: Should not compromise on taste
Some key insights about our core consumer
Health = Not-Fall-Sick & Do-My-Work
Walking Indulgence
Eating well is a way of life, Physical activity is not
‘Pleasure Foods’
Personalized consumption (in shared contexts too)
Quasi-meals growing Balanced Meals 71% Never Exercise
Energy Mental Agility Immunity
Talking Health
PepsiCo Confidential 28
2. KEY INSIGHTS, TRENDS & INFO BANK The Customer
2011 2015
Channel Company Total Outlets
QSR Domino's Pizza 403 900
QSR McDonald's 255 385
QSR Papa John's 30 74
QSR Sbarro 12 40
QSR Subway 250 410
QSR KFC 123 400
FSR PH/PHD 253 500
Cafes Barista Lavazza 145 165
Cafes Whitbread/Costa Coffee 80 100
FSR Carlson/ TGIF 10 13
FSR Blue Foods/Pan India 70 150
FSR Nirulas 25 25
FSR Specialty Group/MLC 68 90
FSR BJN Group 35 42
FSR Barbeque Nation 17 20
FSR/QSR Litebite Foods 43 90
FSR Encore/Twinkle Hospitality 100 200
FSR Kebab Factory 12 20
Trends : QSRs/Fast Food chains will dominate the restaurant landscape in the years ahead
PepsiCo Confidential 30
Trends: Entertainment channel – Malls, Cinemas Up
Mall Mania – Driving New Consumption Points
Cinemas - 3.7 Trips p.a. (vs <1% for other APAC countries)
#1 Entertainer For Indians
• Mall visits emerge as a key hangout activity, both during weekends and weekdays
• PVR acquisition of Cinemax makes it the largest
• Inox is in acquisition mode – Fame & CCPL Cinemas (9 Locations)
87
80
84
78
57
57
80
74
70
69
57
56
Hang out/shopped at the mall
Visited relatives/friends
Watched movies in multiplex
Been to Rest/Hotel/Cafe
Been to clubs/pubs/parties
Been on a long drive/vacation
Weekends Weekdays Source – MTV
Invest in the Investors (Cinepolis)
8851100
Screen Number
2011 2013
Helping Expansion of FS & Cinemas
PepsiCo Confidential 31
Trends: Hotels also seeing high growth
Source: Euromonitor,
Room Supply in India set to grow exponentially
No of Rooms India Upcoming Supply (2010-13)
5714
18497
1835
6874
5432514
2010 2013
Upscale Midscale Economy
23185
95087114000
173000
1998/99 2008/09 2012 2017
Hotel Expansion (2012-17)
120
7 24
112
5 12 10 9 26
10 14 20 31
12
150
10 28
137
38 35 17 12
42 30 33 37
100
42
ITC Leela EIH Ltd. Taj Hyatt Marriott BharatHotels
Park Starwood Pride Accor RoyalOrchid
Carlson IHG
2012 2017
Source – HVS Research, Knight Frank Research
PepsiCo Confidential 32
Customers typically want us to help their business grow in different ways…
Attract new / right consumers
Drive Occasion / Day-part / Health / Sustainability agendas
Increase ticket size with value adds
Drive productivity via operations
PepsiCo Confidential 33
How do restaurants/cinemas generate sales?
Driving Revenue
Inside the Four Walls Trading Area Marketing
Trading Area
87% of business within 5 km
• 50% live there
• 37% work/ shop/go to school/cinema
Primary “traffic generators” may be different by day part
•
Restaurant
Schools Offices
Cinemas
Homes Shops
PepsiCo Confidential 34
Target Audience
Tactical Techniques
Strategies
Objectives
The restaurant profit equation uses TATC to grow revenues
Restaurant Sales Equation
Increase Transaction Count (Traffic) Increase Average Check
Build Traffic Increase
Conversions Sell Larger Items
Sell More Items Per Transaction
Actions must get New Customers
Actions are targeted to Current Customers
• Grand opening
• Newspaper Ads
• Newspaper Inserts
• Direct Mailers • Anniversary/Spl Event
• KA Cross Promo
• PET Label Promo
• News: NPD Preview, etc.
• Celeb Meet & Greet
• Great Ambience
• Great Product/NPD
• Great Customer Service
• Speed of Service • Multiple Vending points
• Service On Seats
• Currency/Price-offs
• Scratch card Promo
• Great Collectibles
• Loyalty Cards (Buy 4 get 5th Free)
• Upsizing
• XL Combos
• Suggestive selling
• Crew Incentive • Staff Buttons “Go Large”
• Feature better value
• Impactful POSM
• Combos – Premiums – Special prices – Proper use of POS
• Suggestive selling
• Kids Meal Packs
• Take Away
• Family meal days/nights
• Combo Crew Incentives
Sales = TC x TA
PepsiCo Confidential 35
Key challenges for customers
• Full Control over the Supply Chain
• Shortage of trained manpower & attrition
• Margin pressures accentuated by rising real estate costs
• Currently turbulent economic environment
• Differentiation
PepsiCo Confidential 36
2. KEY INSIGHTS & INFO DATABANK PepsiCo Brands & Strategies
• The largest Food & Beverage combined business
• 8 Rs1000 crore+ brands: Pepsi, Lay’s, Mirinda, Kurkure, 7Up, Slice, Aquafina, Mountain Dew
• Every brand well known & loved across the country (awareness of 50%+ & distribution reach of 60%+ on most brands)
• A strong mix of globally advantaged brands that have loyal following (like Pepsi, Lay’s & Dew), as well as locally crafted lovemarks, anchored on India rituals (like Kurkure, Slices, Nimbooz)
• Strong innovation footprint & locally created brands: Slice, Kurkure, Nimbooz, Atom, Kurkure puffed snacks, Nimbooz Masala Soda
PepsiCo India owns an incredibly rich house of brands
Powerhouse of Muscular Brands
PepsiCo Confidential 38
That span all consumer needs through the day
Morning Health Dose
Breakfast Nutrition
Thirst Thru The Day Sports Hydration
Mind & Body Boost
Different Tastes of Evening Refreshment
Mid-Day Indulgence
Afternoon Family Snack Through The Day Treat
PepsiCo Confidential 39
Our Brands own priceless image and associations
Youth Aspiration Older Adults
Kitchen Logic Ingredients
International Flavors, Irresistible Taste
Family: Modern Twist on Tradition
Super Grain for Nourishment
and Health
Energy for today, Heart Healthy for Life
PepsiCo Confidential 40
Our Brands own priceless image and associations
Indian Adults/ Family Snacking
Tweens
Hunger Filling, Satisfaction
Traditional Indian Namkeens
(Younger) Adults, middle class
Light & Fun Shapes & Flavours
Cheesy Mischievous Fun Joy of Sharing Bole Mere Lips...I Love
Uncle Chips
PepsiCo Confidential 41
Our Brands own priceless image and associations
Youth: Capture the excitement of
NOW
Young Adults: Mood Uplifting
Bold Orange Taste
Electric Taste of Cola
Youth: Impulsive Uninhibited Fun
Lemon Refreshment
Young Men: Courage liquid
Mind & Body Boost
PepsiCo Confidential 42
Our Brands own priceless image and associations
Young Adults: Sensorial Pleasure
All Adults
9 Fruit Nutrients Mango Indulgence
Young Families: Breakfast Nutrition
Quality, Purity, Taste
Sports & Active Fans
Rehydration, Sports
Achievement
Make Breakfast 100%
The Purest Part of You
Is it in you?
PepsiCo Confidential 43
The PepsiCo Foodservice Philosophy
Towards that end, we believe that
• One solution doesn’t work for everyone
• Our focus is customized and based on the customer’s priorities
• We aim to set best-in-class standards in service, quality and innovation
• We use the power of shared Insights
Help our customers grow their entire business!
PepsiCo Confidential 44
1. Combos
PepsiCo leverages 4 most commonly used
strategies in QSR/Cinema
2. Cup Upsize
3. Crew 4. News
PepsiCo Confidential 45
Attract new/right consumers Drive Occasion/Day
part/Health/Sustainability agendas
Increase ticket size with value adds Drive productivity via operations
Utilizing fleet vehicles to drive awareness and footfalls for our customers
Some examples of how PepsiCo has partnered them…
Quaker in a cup format customized for airlines
Leveraging platforms/celebs to drive high ticket size items
Lowered cost of ingredients, packs; operational efficiencies saving labor cost…
PepsiCo Confidential 46
And extended our range into various solutions
BEV
FOODs
QSR FSR Cinema
Lipton FTN Juice FTN Premium Water Premium Glass Bottle
Frozen
Mixology Asian Specialty Bev. Smoothies Premium Water Powder Teas/Juice Mixology
Breakfast Snacks Breakfast Muffins Nachos Station
Premium Snacks Nachos Muffins Cookies
PepsiCo Confidential 47
2. KEY INSIGHTS & INFO DATABANK PepsiCo Equipment
PepsiCo India owns an array of equipment assets
• In both the foods and the beverages categories
• Equipment is critical to success in this space – it must match customer needs on several dimensions: – Financial
– Operational
– Space
– Imagery
– Portfolio
• Each machine may perform a different function – ranges from simply stocking to a complete creation of finished product from scratch
The next few pages explains the functions of each of these, along with some basic financials to help you understand how the business works, and devise suitable solutions either using these or better still, developing your own out-of-the-box ideas.
PepsiCo Confidential 49
What is Post Mix?
• Soft drink made on location- miniature factory installed on-premise • Local water must be filtered, carbonated and blended with syrup at the location while being
dispensed.
Bag-in-Box
Syrup Pump (Gas)
Fountain Dispenser
Valve
80-85 psi
CO2
1200 psi
60 -65 psi
Carbonator Water supply
(filtered)
Pre-carbonation cooling coil
Tubing
In remote chilled systems, the syrup is chilled in a back room away from the dispenser and then pumped through the tubing into the dispenser.
PepsiCo Confidential 50
The process at the PLANT
Water Treatment
CO2
Sugar
Concentrate
Post Mix
….syrup rests
Filter Bottles,
Cans, Premix
Simple Syrup
Finished Syrup
Soda Water
Carbonator
PepsiCo Confidential 51
Cooler Refrigeration System Type
A
B
C
D
PepsiCo Confidential 52
Functioning of Refrigeration System
• COMPRESSOR - Low temperature low pressure vapor at State A is compressed to high temperature pressure vapor at State B (SUPERHEATING PROCESS)
• CONDENSER - Vapor is condensed into high pressure vapor at State C (DE-SUPERHEATING/ HEAT REJECTION/ SUB COOLING PROCESS)
• CAPILLARY - Condensed liquid passes through expansion devise (capillary) where high temperature & pressure gets converted into low temperature & pressure
• EVAPORATOR - Vapor is throttled down to low pressure liquid & passed on to
evaporator at State D. where it absorbs heat from surroundings from circulating fluid (being refrigerated) & vaporizes into low pressure vapor at State A
• HEADER - Excess liquid coming from evaporator gets stored here which helps in reducing excessive liquid getting into compressor. Excess liquid in compressor would result in increasing load on pumping & thereby failure of Compressor
• FILTER DRIER - Moisture is absorbed from Refrigerant
PepsiCo Confidential 53
Bunn Machine
Counter Top Cooler
Beverages Equipments
Cost Rs 2.85 Lakh
Maintenance Cost Rs 8000/Annum One Trip/Month
Water Connection Yes
No. of Valves 2
Input Ingredients Water, Concentrate
Output Product Frozen Slush
Dimensions (cm) 80 (H) X 40 (W) X 62 (D)
Hurdle rate 35 glasses/day
Cost Rs 10,000
Maintenance Cost Rs 300/Annum
Water Connection No
No. of Valves NA
Input Ingredients NA
Output Product NA
Dimensions (cm) 89 (H) X 44 (W) X 43 (D)
Capacity 70 Litres (42 Bottles of 300ml)
Hurdle rate 100cases/year
PepsiCo Confidential 54
Visi Cooler
Double Door Visi Cooler
Beverages Equipments
Cost Rs 35,000
Maintenance Cost Rs 850/Annum
Water Connection No
No. of Valves NA
Input Ingredients NA
Output Product NA
Dimensions (cm) 200 (H) X 64 (W) X 72(D)
Capacity 650 Litres (315 Bottles of 300ml)
Hurdle rate 700 cases*/year
Cost Rs 55,000
Maintenance Cost Rs 1200/Annum
Water Connection No
No. of Valves NA
Input Ingredients NA
Output Product NA
Dimensions (cm) 200 (H) X 116 (W) X 84 (D)
Capacity 1000 Litres (760 Bottles of 300ml)
Hurdle Rate 1500 cases/year
PepsiCo Confidential 55 * 1 case = 24 servings of 300ml beverage
Pmx Tower
Pmx Machine
Beverages Equipments
Cost Rs 2.65 Lakh
Maintenance Cost
Rs 1200/Annum Rs 10,000/Annum 2 Trips Monthly – One for Preventive
Main., Other for Sanitation
Water Connection Yes
No. of Valves 6
Input Ingredients Conc., CO2, Water
Output Product Carbonated Beverage
Dimensions (cm) 90 (H) X 55 (W) X 78 (D)
Hurdle rate 65 cups/day
Cost Rs 1.75 Lac/unit (Installed in Pair) + Rs 2.6 Lac (other equipment's)
Maintenance Cost Rs 10,000/Annum. 2 Trips Monthly –for Preventive Main and Sanitation
Water Connection Yes
No. of Valves 8 per machine (Total 16)
Input Ingredients Conc., CO2, Water
Output Product Carbonated Beverage
Dimensions (cm) 69 (H) X 47 (W)
Hurdle rate 100 cups/day
PepsiCo Confidential 56
BEVERAGES/FOODS EQUIPMENTS
Avm Merchant 6
Cost Rs 4.5 Lakh
Water Connection No
No. of Valves NA
Input Ingredients NA
Output Product NA
Dimensions (cm) 180 (H) X 110 (W) X 95(D)
Maintenance Cost Rs 12,000/Annum
Capacity 30 Packs of Snacks + 200 Bottles of Beverages
Hurdle rate 2920 cases/year
PepsiCo Confidential 57
FOODS EQUIPMENTS
Counter Top Rack Counter Top Rack Premium Hospitality Rack
Cost Rs 1500
Shelves 2
Facings/Shelf 2
Depth/Facing 2
Capacity (Packs) 8
Cost Rs 2500
Shelves 2
Facings/Shelf 5
Depth/Facing 2
Capacity (Packs) 20
Cost Rs 4000
Shelves 4
Facings/Shelf 4
Depth/Facing 8
Capacity (Packs) 128
PepsiCo Confidential 58
FOODS EQUIPMENTS
MODC Rack Foods Rack Quaker Express Rack
Cinema Hawking Tray
Cost Rs 1800
Shelves 5
Facings/Shelf 5
Depth/Facing 3
Capacity (Packs) 75
Cost Rs 5000
Shelves 5
Facings/Shelf 5
Depth/Facing 5
Capacity (Packs) 125
Cost Rs 1500
Shelves 3
Facings/Shelf 2
Depth/Facing 2
Capacity (Packs) 12
Cost Rs 2500
PepsiCo Confidential 59
• Touch Screen User Interface
• Small footprint
• Capable of running digital media
• Suitable for Self Serve or Crew serve
• 12 ingredients e.g.: 8 brands & 4 flavor shots
• Capability for high-low-non carb
• One common architecture supports multiple languages, brands globally
An example of a recent innovation success …Pepsi Touch
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Another recent success: ICE BOLT frozen slush at cinemas
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Our Equipment priorities are to
• Get the right throughput from the equipment to justify ROI
• Ensure Quality Control
• Reduce base equipment acquisition cost & service costs
• Meet customer need of space constraints & energy efficiency, while be attractive looking to drive impulse purchase
• Support innovations that can drive innovative products (e.g. Flavor Shots)
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The Key Considerations for PepsiCo when launching an innovation
• How will we differentiate so as to earn a premium revenue realization
• Does the capex justify the volume and ROI
• Who will be our partners – in-house, franchisee, 3rd Party manufacturer, customer, etc.
• How will we distribute effectively: go-to-market strategy
• How will we control product quality
• How will we protect the brand from dilution
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3. BEST PRACTICE CASE STUDIES The Sweet Spot: Consumer, Customer And PEPSICO
A few of our success stories from across the world
Country Initiative Customer
A INDIA Cinemas Activation PVR
B Mexico Doritos street snack
C Puerto Rico Quaker QSRs
D US Culinary Innovation Taco Bell
E UK Breakfast McDonald’s
F Other Products/Cases
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A. CINEMAS ACTIVATION India
Cinema is the no. 1 entertainer in India
Opportunity to engage with consumers & generate billions of consumer impressions
988+ Multiplex screens
3.04 Average trips
p.a. to a cinema
1200% Growth in multiplexes
over past five years
Fuelled by a exponential growth in multiplex culture Consumers are most engaged in this channel
3770 million Number of tickets sold p.a.
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CINEMA IS A RELIGION IN INDIA
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We first identified barriers to beverage consumption
16%
6%
10%
10%
16%
42%
Others
Show Time
Packaging
Lack of Choice
Wasn't Enough Time
Unreasonable Pricing
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Tackling Barrier 1: Too expensive
SR Strike Rate
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Overcoming Barriers 2/3: Time shortage, Less choices
Mirinda Freeze
7Up Nimbooz Masala Soda
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Ensuring we built brand imagery at every touch point
Queues
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RESULTS: Both Volumes and Imagery Up significantly
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Learnings captured in a 6*2 framework…
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Resulting in continued leadership at Indian Cinemas
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B. DORITOS Mexico
Leverage existing packaged offering;
Customize for a portable Center of Plate/Snack
Winning on the Street in Mexico
Doritos Spicy Sweet Chili Walking Chicken Curry
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C. QUAKER Puerto Rico
Consumer lifestyles are changing
On the go lifestyle.
55% of consumers that eat breakfast, consume it OOH.
45% of consumers that have breakfast OOH, eat @ a Quick Service Restaurant (QSR) Chain.
Consumers have considerably reduced their grocery expenses.
Consumers look for prepared meal options.
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Quaker has strong equity in the market
Quaker Oatmeal #1 in the World
High SOM 83% (Value)
High TOM 90%
Penetration 85%
Strong Health related attributes: Nutritious, Healthy and Good for the Heart Cholesterol “helper” and Fiber among
the most remembered product characteristics
Puerto Rico carries one of the highest Oatmeal Per cap around the world (1 KG)
Oatmeal is the most important segment in Hot Cereals PR, accounting for 71% of mix
Total PR SOM - Hot Cereal
71%
16%
4% 7% 2%
Oatmeal Wheat
Cream of Corn Rice
Mixed
SOM - Share of market | TOM - Top of Mind
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Based on Customization, Logistics…
Channel Customized Product
Product: Instant Oatmeal Fortified with Iron
Cut: PR’s Market Oatmeal Special Cut
Size: 70.5 ounces/2,000 Grs. per bag
Case Count: 6 units/per case
Cost: $XX per case
Quick Delivery Response
Engaged through Ballester Hermanos (Distributors) Food Service Representatives
Client Order’s
Final Client
BH Delivers 48 hours
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…Profitability and Partnership
High Margin Proposition
• Client Cost per bag- XX – XX% SRP/Kilo benefit
• Servings per bag- 32 (for a finished 8 ounce
product)
• Ounces per serving- 2.0 Oz (0.2oz of spoilage)
• Oatmeal cost per serving- XX
• Average SRP per cup - XX
Contract Elements
Media, In Store and equipment negotiations varies by QSR Based on BE
Specialized Equipment Targeted
Nutritional Seminars
Oatmeal Cooking
Trainings Media Exposure
In Store Visibility
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Register Topper
Menuboard
Billboards
Windows Decal Banners
Menuboard Trayliner
In-Store Dangler Table Tent
Created a strong Quaker QSR relationship
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Product Specifications (e.g.)
Estimated Raw Material Cost: XX Average SRP 8 ounces-XX
Recipe for 8 ounces
serving/Costs
Additional Equipment
Quaker Oats X
Milk X
Sugar X
Salt X
Cup, Lid & Spoon X
Oats Cooker Storage/Quality Preservation
Cooking Time: 20 min/Cost per unit XX Canister/Cost per unit X
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D. CULINARY INNOVATION USA
How Does PepsiCo add Value
Our brands provide flavor, texture and fun to existing offerings
… and they also must be simple for an operator to execute
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Taco Bell: Evolution from CSD Supplier to Total Culinary Solutions Provider
YESTERDAY: CSD Supplier
TODAY: Total Food & Beverage Solutions Partner
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New Opportunity: Drive “Center of the Plate” Menu Innovation Leveraging PepsiCo Brand
Portfolio and Culinary Expertise
Taco Bell needed to “re-invigorate” the menu
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Building a solid, incremental foods business with Taco Bell
PepsiCo Brands can Add Value by Differentiating Base Offerings Through Branded Innovation
Establish Permanent Menu Item
• 2010: P5 National Launch (XX MM)
• 2011: FY (XX MM)
• 2012: FYF (XX MM)
Build Culinary Pipeline
• 2011: P1-P5 (X MM)
• 2012: P1-P2 (X MM)
Launch Iconic Signature News
• 2011: Test Market
• 2012: P3 National Launch
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Doritos Loco Taco… “Re-inventing the Taco!” Greg Creed
Taco Bell’s DLT Launch Objective: Build a $1B platform
Fire and Ice…
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… driving increased PepsiCo importance to Taco Bell
Taco Bell Sales 2008 $X Billion Taco Bell Sales 2012F $X Billion
We have just begun…
Pepsi = 13-15% of TB Sales
Pepsi + Frito-Lay = 22-25% of TB Sales
DLT Extensions Late Night Breakfast OASIS
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E. BREAKFAST UK
Bending breakfast habits in the UK
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Overview/Launch Rationale
We launched Quaker with McDonald’s at the end of 2004 as part of their new Breakfast menu…
Front window display Drive Thru menu
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Overview/Launch Rationale
…the key benefit for McDonald’s was huge positive PR. Their objective was to drive consumer re-evaluation of the offer
Sandwell Express Walsall Express
Wolverhampton Express
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Product Proposition
Simple and high quality porridge, a healthier way to start the day – breakfast positioning
Porridge Oats served with Jam or Syrup
FMO Build The product consists of approximately 27gr of Quaker Rolled Oats that is topped with skim milk 100% organic. Made-to-order in single servings, it is served hot – microwave - and offered in a paperboard cup with plastic spoon
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Product Performance
We also refreshed our packaging in 2007 and McDonald’s gave Oatso Simple a more defined role supporting Healthier core food items
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Product Performance
Quaker breakfast bowl giveaway leverages momentum and adds value
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Stringent Operations Procedures
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Huge Success
Delivered over
3.5 Million servings annually through McDonald’s.
Sales driven predominantly by significant up weight in McDonald’s Marketing
spend to support Breakfast
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F. SOME OTHER EXAMPLES
In China, Unilever has seen big success in Food Service
Unilever Food Solutions success driven by 3-step philosophy
Outside of Unilever most concentrate & powder players are small
1
2
3
Open
Pour powder
Pour water
For LRB, Lipton currently provides mango tea and lemon tea in powdered format for preparation on-premise
Concentrate
Powder
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Factors that have contributed to this success
Dedicated team and organization support
Separate reporting org.
• Team reports directly to Global Food Solutions head
• Dedicated sales force, servicing key accounts
• Experienced chef in each key areas
for sales and service
Tailored GTM model
Tailor designed GTM model
• Both dedicated KA sales and chef team serving all major restaurants
• Relying on specialized restaurant distributors to distribute, leveraging their scale benefits
Value added service outside realm of food and beverage
Deep culinary expertise
Chefs provide new menu items with recipes and ingredients to customers
Comprehensive partnership model with restaurants, providing restaurant related training
Kitchen management
Restaurant service management
Consumer management
Unilever F/S team
Specialized restaurant
distributors
Unilever Food Solutions
F/S HQ
F/S
Country
Chef Sales
Unilever
Corporate HQ
China
Ice-cream
Foods Personal
care
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The QSR ‘Wholesome’ Breakfast Landscape across markets
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Finally, some examples of partnering customer led beverage innovation
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4. WHAT WE EXPECT FROM YOU
Bringing up the core business challenge again…
How should PepsiCo India participate in the rapidly expanding business opportunity provided by increased out-of-home
eating and drinking?*
What is the best end-to-end business model solution to monetize our brand and equipment assets, to ensure we gain on every front viz.
• Volume & Value
• Profit
• Equity
• Partnerships with ‘Food Service’ Customers
*also referred to as On Premise(OP) or Foodservice (FS) within the industry
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Specifically, we would like you to answer questions such as….
• What are the “low hanging fruit” opportunities & solutions and which ones are farther out?
• For Innovations, how should we do “custom” innovation that gives us a sustainable pipeline and builds PepsiCo incumbency? And how should we do “platform” innovation that creates menu by day part and/or cohort?
• What kind of segmentation model might be most useful to identify opportunities – consumer X customer X occasion?
• How can we take our brand activations to the next level in this space? What should be our brand portfolio strategy – i.e. which brands for which customers, occasions, cohorts?
• What new/modified equipment can we employ to maximize the opportunities keeping in mind cost, space, simplicity, image and convenience considerations?
• What is the ‘Business Model’ of the idea - P&L impact of the solutions, Manufacturing details, Distribution, Partnerships, etc. Both short term and longer term? For us and for our customer partners?
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For each “Solution” that you propose:
Please ensure that you have considered well, and have described: • A business model solution that captures:
– Should it be completely company owned or have a mix of partnerships with franchise/3rd parties to deliver your recommendation
– Please present the pros & cons properly before suggesting recommendation
• Benefits to PepsiCo in terms of: – Strategic Win
– Volume
– Value
– Profit
– Brand Equity
– Sustainability and
– Customer relationship
– Partnerships
• Benefits to the Customer in terms of: – Attracting/retaining consumers
– Ticket upsizing
– Portfolio planning/gaps
– Value/volume/profit gains
– Longer term strategic intent
• Benefits to the Consumer in terms of functional and emotional payoffs from the product and the experience together
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How We Will Evaluate
Not more than 5* pages per entry
Will be entertained for the first shortlist.
If shortlisted, you will get the chance to submit a more detailed entry for the next round.
Evaluations will be on the basis of: 1. Appreciation of the business problem
2. Power of Insight identified for the situation analysis
3. Equipment Innovation and P&L workings
4. Creativity and Feasibility of solutions proposed – For Customer and for PepsiCo
5. Clarity of articulation/presentation
Ideas that drive revenue profitably will be given high weightage
*In power point sl ides, not including the cover slide. Longer entries will get automatically disqualified at the first stage
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6. APPENDIX About PepsiCo
Acronyms
PepsiCo: Great Performance, Great Values!
$26 mm contribution to foundation causes
Water Global Awards- Environmental Company
of the Year
3rd in CR Magazine- 100 Best Corporate Citizens
World No.2 in F&B
Presence in 200 countries with over 500
brands
22 brands > $1 bn sales each
285,000 employees
Revenues $65 bn
World No.3 in FMCG Ranked 1st in 2011 Dow
Jones Sustainability World Index F&B sector
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PepsiCo India: An Exciting Journey
TIME
VO
LUM
E
1993
1995
1996 1998
1999
2002
2006 2008
2000
2009
2010
2011
2012
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PepsiCo India: Performance with Purpose!
CII National Award Water Management
AMCHAM Innovative CSR Award Kolkata Plant
Golden Peacock Award Water Conservation
Social Governance Award “Waste to Wealth”
PepsiCo Award Environmental Sustainability
Water Digest Award For Water Practices
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Vast & structured Make-Sell-Deliver footprint
Foods plants
Franchise owned bottling plants
Company owned bottling plants
Kolkata
Pune
Channo Bazpur
Jainpur
Sataria
Panipat
Bharuch
Mahul
Dukes Aurangabad
Roha
Hyderabad
Bangalore
Palakkad
Chennai
Madurai
Jammu
Phillaur
Delhi Noida
Chaupanki
Kosi
Jodhpur
Bhopal
Nagpur
Jharkhand
Patna
Cuttak
Vizag
Guntur Goa Dharwad
Guwahati
Pondicherry co-packer
Trichy co-packer
Kolkata
Pune
Channo
Erode
Rajkot
Hosur
Guwahati Sonepat
Gwalior
Bangalore
Kolhapur
Faridabad Bhiwadi
Hyderabad
Kanpur
Plant
Distributor Hub
Wholesaler Urban spoke Rural spoke
Retailer Retailer
Retailer
BEVERAGES
Retailer
Plant
FOODS
DC
Distributor Wholesaler
Retailer Retailer
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Beverages Portfolio
Core products
Carbonated Soft Drinks (CSD)
Pepsi/7Up/Mirinda/
Mountain Dew/Innovation- Pepsi Atom/7Up Nimbooz
Masala Soda
Evervess Soda
Slice
Nimbooz
Aquafina
Tropicana
Gatorade
TATA Gluco+
TATA Water+
Lipton Ice Tea
Himalayan
Juice Based Drinks (JBD)
Water
Juices
Sports Drinks
Ice tea
Water
Premium products
Value Products
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Foods Portfolio
Oats
Poha
Upma
Salty
Potato Chips
Bridge
Extruded
Traditional
Lay’s
Kurkure
Extruded (Monster Paws/ Puff Corn)
Lehar
Lay’s Baked
Uncle Chipps
Cheetos
Quaker
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LRB Liquid Refreshment Beverage
CSD Carbonated Soft Drink
MBD Mango Based Drink
FS Food Service
OP On premise
QSR Quick Service Restaurant
FSR Full Service Restaurant
T&L Travel & Lodging
SEC Socio Economic Classification
WIFM What’s in it for me
SR Strike Rate
SSG Same store growth
CTS Consumer Track Survey
SOM Share of market
CAGR Compounded Annual Growth Rate
TOM Top of mind
Frequently used acronyms
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