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In 2008, Fritolay India, the snack foods
division of PepsiCo Inc.1
(PepsiCo) signed a memorandum of understanding (MoU) with the
Indian Medical Association2
(IMA) to promote its brands Tropicana (fruit juice) and Quaker
Oats (breakfast cereal).
As per the terms of the deal, the IMA would endorse these two
brands for three years. According to the IMA, it was a
non-commercial deal, but PepsiCo would cover expenses related to
sponsoring events, conferences, and seminars.
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PepsiCo was already well known for using high-profile
celebrity endorsements for its products, both globally as well as in
India. However, this was the first time that the company had entered
into an agreement with a medical organization for the endorsement of its
brands.3
As of early May 2008, the company's ad agencies (JWT for Tropicana and
Fortune Communications for Quaker Oats) were working on a new ad
campaigns for the two brands.
Analysts felt that in addition to the opportunity of taking advantage of
the growing health and wellness market in India4,
the deal also provided the company with the opportunity of competing
effectively with its rivals.
In India, Quaker Oats faced stiff competition from products of companies
such as Hindustan Unilever Ltd.5,
Kellogg Company6,
Nestlé SA7,
etc., while Tropicana lagged behind Dabur Real of Dabur India Ltd.8
According to analysts, this deal, the brainchild of Indra Nooyi, the
chairman and CEO of PepsiCo, was aimed at increasing the company's focus
on health and wellness.
PepsiCo was hoping that this focus would improve its image in the eyes
of the consumers and investors, and also help silence critics who
charged it with promoting unhealthy products such as sugary drinks and
salt-laden snacks.
FritoLay India, which was already considered one of the fastest growing
FMCG companies in India, had been eyeing the health and wellness market
for quite some time.
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1] PepsiCo Inc., headquartered in New York City,
USA, is one of the world's leading manufacturers and marketers of carbonated and
non-carbonated beverages and other food products. It was founded in 1965 through
the merger of Pepsi-Cola and Frito-Lay.
2] The Indian Medical Association (IMA) is the
national organization of "Doctors of Modern Scientific System of Medicine" in
India. Established in 1928, it represented over 176,000 doctors in the country
as of 2008.
3] "PepsiCo and IMA Sign Non-Commercial Deal," www.medindia.net, May 7, 2008.
4] As of early 2008, the health and wellness market
in India was estimated to be Rs. 20 billion with a year-on-year growth of over
25 percent. (Source: "Yash Birla to Invest Rs 300 cr in Healthcare," www.economictimes.indiatimes.com, April 18, 2008.)
5] Hindustan Unilever Ltd. (earlier known as
Hindustan Lever Ltd.) is the largest fast moving consumer goods (FMCG) company
in India. As of 2007, global consumer goods giant Unilever Plc. held a 51
percent stake in the company.
6] Kellogg Company, headquartered in Battle Creek,
Michigan, USA, is one of the leading producers of breakfast cereals, snack
foods, cookies, etc.
7] Nestlé SA, headquartered in Vevey, Switzerland, is
one of the world's leading packaged food companies.
8] Dabur India Ltd., headquartered in Gaziabad,
India, is one of the largest FMCG companies in India with interests in
healthcare, personal care and food products. |
