Pepsi seeks unique approach to China

02 July 2009

BEIJING: PepsiCo, the US soft drinks giant, needs to think "differently and disruptively" in order to maximise its potential in the Chinese market, according to the company's chairman/ceo, Indra Nooyi.

Last year, PepsiCo announced it would invest $1 billion (€707m; £605m) in China over the next four years, with these resources being directed to initiatives varying from R&D to marketing.

Nooyi has also recently conducted an "immersion" tour of the country in order to gain an insight into "how people live, how they eat, what the growth possibilities are."

Overall, she suggested that the company's operations in world's most populous nation are currently "good, but not good enough. The opportunities are so much bigger."

Among the major trends she observed were that younger consumers often display a preference for multinational brands and fast food.

By contrast, many of their older counterparts, who have been forced to adapt to changing conditions as the economy develops, have different priorities.

Similarly, while many members of the lower age-range shop at supermarkets and frequently eat out, older Chinese typically opt for traditional grocery outlets and to cook at home.

However, the tendency to eat products such as crisps while watching television cuts across the various demographic segments.

As such, Nooyi suggested that PepsiCo's "model for China has to be vastly different," and focus on the unique conditions in the country.

Euromonitor reports that Coca-Cola has a 47.3% share of the cola market in China, and a 15.3% share of the total beverage sector, with these figures reaching 44.5% and 6.2% for PepsiCo respectively.

However, PepsiCo argues that data from other information providers suggests its main variant is the number one cola brand in Asian country.

The company also opened five new bottling plants in China last month, and will construct a similar number of outlets in the next two years.

At that time, Nooyi said that "despite the current uncertainty in many parts of the world, we have no doubt that China will remain a powerful engine of global economic expansion."

Data sourced from Wall Street Journal; additional content by WARC staff