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Pepsi Indian Premier League: Is Cricket Title Sponsorship the Way to Go for PepsiCo?

Posted by Mark J. Miller on November 30, 2012 10:29 AM

PepsiCo is doing everything it can to try and convince the 1.2 billion people of India that they might want to try a Pepsi. Or maybe a Mountain Dew?

The beverage giant has just signed on as the title sponsor the Indian Premier League, a major cricket tournament that will be called the Pepsi Indian Premier League for the next five years. And the naming rights only cost about $72 million, twice the amount that the previous five-year sponsor, realtor DLF, shelled out.

Nasdaq.com comments that PepsiCo “has quite a lot invested in the country with a range of snacks (Lay's and Kurkure being the flagship brands) and its usual line of beverages.” That kind of investment has the company trying to protect its place in India as local companies and others try to unseat them. As a CNBC report in the market asked this week, 

While the beverage and food multinational is already a big sponsor of cricket, the IPL investment is reportedly its biggest investment in the game so far. But is the IPL association worth so much money, given that the last edition of the tournament saw viewer ratings at their lowest and given that the BCCI continues to have a volatile relationship with team owners?

India's Economic Times notes that Kurkure and Lay’s, which are the leaders of India’s snack market, are losing market share to such local snack makers as Balaji, Yellow Diamond and DFM Foods' Crax. And new competitors are likely to spring up since the salted-snack market in India has grown 25% annually.

Coca-Cola, the Yankees to Pepsi’s Red Sox, are of course right in there battling and Nasdaq has it that Coke has “been diluting Pepsi's share in the beverage segment (in India) thanks to effective marketing.”

To help win over the massive Asian market, PepsiCo is expanding its R&D centers, with its most recent facility just opening in Shanghai. “With food and beverage test kitchens, pilot production plants, and consumer taste-tasting facilities all under one roof, we’ll be able to innovate faster than ever before – significantly reducing the time it takes to turn new ideas from our chefs in our test kitchens into new products available to consumers on store shelves,” said Mehmood Khan, PepsiCo’s chief scientific officer.

Out of such R&D centers has come such locally focused products as Indian snack brand Kurkure and such Lay’s potato-chip flavors as cucumber in China, red caviar in Russia, seaweed in Thailand, magic masala in India, and salt and vinegar in Australia. And lest we forget, all those unique local variations that Pepsi has been trying in Japan.

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