- Created: Wednesday, 13 September 2017 11:36
Ravi Jaipuria, beverages and snacks major Pepsi-Co’s largest Indian bottling partner, has set the stage for potential competition with its long term ally by launching its own salty snacks brand.
Jaipuria-promoted RJ Corp has launched salty snacks under the brand name Kaabuli, and, according to an industry executive directly aware of the development, some products are strikingly similar to product offerings under PepsiCo’s Kurkure salty snacks brand.
The company, however, denied it would compete with Kurkure. “Our snack brand is priced at the entry level and will not compete with PepsiCo’s value-added products,” an RJ Corp spokesperson told ET. The spokesperson further said by and large, the Kaabuli brand of salty snacks would be sold through Jaipuria’s own retail venture JMart.
A PepsiCo spokesperson said, “We are aware of the recent venture by RJ Corp and we understand that this will only be sold through their exclusive retail chain network JMart.” An industry official directly aware of the development, however, said PepsiCo is upset with RJ Corp. “The move has not gone down well with PepsiCo; it believes the move is not in the spirit of partnership,” the official said on condition of anonymity.
While RJ Corp’s no-compete contract with PepsiCo is with beverages, both entities work closely and have leveraged cross-synergies, at the former’s retail and hospitality ventures. JMart, developed on lines of small-format convenience stores, operates over 80 stores as of now.
RJ Corp, with diversified interests across sectors, has said in the past that it hopes to cross $5 billion in revenues by 2020, from about $1.6 billion now. While PepsiCo has been pushing high-margin products such as Lay’s Maxx, it operates equally aggressively in the mass segment, especially to compete with strong regional brands such as Balaji Wafers, Prataap Snacks, Bikanervala, and Bikaji Foods.
Industry estimates peg domestic salty snacks market at over Rs 17,000 crore. Global researcher Euromonitor estimates the category to cross sales of nearly $5 billion, or about Rs 35,800 crore, by 2020. While regional strongholds have been giving stiff competition to established players in the segment with aggressive entry-level pricing, localised flavours and quick turnaround, two retail sources said PepsiCo’s snacks brands Kurkure and Lay’s are regaining share, with western snacks category leader Lay’s share growing incrementally.
Sourcce: ET Retail