Is Pepsi too little too late with this deal or are they perhaps the new energy needed at the right time to capture a new audience and close the gap between them and Coca-Cola?
By Adi Narayan via Bloomberg Businessweek
PepsiCo Inc. (PEP) is betting on India’s annual cricket tournament to arrest at least five years of decline in market share and close the gap with leader Coca-Cola Co. in the South Asian nation’s soft drink market.
The world’s second-largest beverage company, which is spending 3.97 billion rupees ($73 million) over five years on sponsoring the Indian Premier League, will introduce a special edition 500 milliliter can and offer fans opportunities to watch games with celebrities, Deepika Warrier, vice president for beverage marketing at Purchase, New York-based PepsiCo’s India unit, said.
The popularity of the Indian Premier League, that opened last night with performances by Bollywood star Shah Rukh Khan and American rapper Pitbull, has been on the wane with television ratings dropping and advertising rates falling as much as 15 percent. Still, PepsiCo agreed to spend double the previous sponsor to ride on the passion for the sport in a country where the market for soft drinks is estimated by Euromonitor to expand twofold to $18.2 billion by 2017.
“The timing of Pepsi IPL coincides with a peak selling season for our business,” said Warrier. “Nearly 50 percent of beverage consumption happens in these months, so driving brand relevance and consumer engagement during this period will give us a big competitive advantage in the marketplace.”
Coca-Cola (KO), the world’s largest soft-drink maker, will buy “airtime on IPL,” the local unit of the Atlanta-based company said in an e-mailed response. It has also started selling a 200 ml bottle of the soda in some parts of the country at 8 rupees (15 U.S. cents).
The IPL, where nine teams compete in a Twenty20 game of cricket, started in 2008 when the Board of Control for Cricket in India auctioned off the league’s clubs to investors including billionaire Mukesh Ambani, chairman of Reliance Industries Ltd. (RIL), and movie star Khan.
The rapid-fire appeal of a Twenty20 match has won huge audience in a cricket crazy country. The sport, invented in England more than four centuries ago, has largely been played in former British colonies. The league capitalizes on the growing popularity of the shorter version of the game compared with the more traditional one played over five days with breaks for lunch and tea.
Still, the league’s popularity is on the wane. Television rating point… [Read Full Article Here]