Frito-Lay, the snack division of US soft drinks group Pepsi, has bought its only serious rival in the Indian potato chip market, Uncle Chipps. The acquired brand belongs to Uncle Chipps Co. Ltd, based near Delhi. Frito Lay is also buying some machinery from the company.
Neither side disclosed the price. Brands not past the hump in the product life cycle have been sold in the near past at approximately the annual sale value, which, in this case, is around US$9m. Amrit Agro, owners of Uncle Chipps. will continue manufacturing the product on contract for Pepsi at their existing facility at Silvassa, a sales tax haven 100 miles north of Bombay. Amrit Agro will continue operating in its other product categories.
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The snack foods business in India is huge and growing fast. In the packaged snacks business, estimated at about US$600m, packaged potato chips account for about US$44m. This market is dominated by Frito-Lay, Uncle Chipps, Hello and Haldiram, although major cities also have local favourites.
Adapted to Indian culture
Frito Lay is marketed in seven flavours : Pudina Punch, Classic Salted, Tangy tomato, Magic Masala, Saucy Ketchup and two new flavours, “American Style Cream n Onion”, and Lehar Kurkure. Pudina is an Indian flavouring herb. ‘Masala’ in most Indian languages means ‘spice,’ and ‘kurkura’ means ‘crisp.’ ‘Lehar,’ meaning a surf of water or pleasant wind, is Pepsi’s favourite word for some of its products, including a drink. The Frito Lay brand is relatively unknown despite the product’s success : consumers still ask for it by its old name, Ruffles. Other brands are Lehar and Cheetos.
Pepsi has also adapted its product portfolio to Indian snacking habits, introducing typically Indian products and names, notably ‘bhujia,’ a type of vermicelli made by extruding potato flour.
Local production from seed
Pepsi also has a presence in Indian agriculture so as to insulate against price fluctuations, and to grow low-sugar, high solids potato. Besides owning a large farm in northern India, it also has contract farmers. Frito Lay sales last year were around US$28m.
By Navroz Havewala
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