4 - Refresco.de

Market review 2009
“I feel that indirectly private labels
are the spur of growth in A-brands”
We also talked with Charles Bouaziz, President of PepsiCo
Western Europe. He gives his view on developments in private
label from the perspective of a major A-brand soft drink and
juice manufacturer.
What is your strategy for maintaining market share in
competition with private label?
“Our competition with private label highly depends on the
brands and market segments involved. Taking the case of
juice in the French market, there is frankly little movement
between our brand Tropicana and private label, since there is
not sufficient immediate price difference for people to switch
from the brand to a private label. A look at the juice market in
Germany reveals the same consumer behavior: Punica seems to
be market leader in fruit-juice based beverages. Then we play
on innovation and differentiation to stay ahead of the curve. In
the carbonated soft drinks segment you see more competition,
especially for brands such as Pepsi.
The fundamental difference with juices is that in CSDs – and
especially in colas - both private label and we have a price
position enabling us to attempt to challenge the leader
Coca-Cola. It is more appropriate to consider Pepsi as more of
an ally of private label in the assault on the large segment-dominant
brand than to view the market as one where competition
exists between private label and us. We recognize that some
transfer occurs between the two, especially regarding people
who are heavily price conscious and who switch from Coca-Cola
to Pepsi or private label. This is less the case in other categories
than cola. In the RTD tea segment, for example, there is no
other A-brand than Lipton. The alternatives to Lipton can only
be found in private label, but this will change next year as we
expect Oasis Tea to be introduced in the market. This should
definitely help to bring more dynamism in this segment.”
Are price and promotion the current critical success factors?
“It is difficult to isolate a single parameter. When you have the
ambition to develop a brand you cannot just rely on the factors
of price and promotion. We invested more in brand identity
during the period of crisis. This gave us a competitive advan-
Charles Bouaziz, Pepsico West Europe
tage because it helped to distinguish us from other brands that
invested less during the crisis. Because of investment in the
brand, we had been investing less in promotions in response to
distributor demand. Afterwards, we lost some sales opportunities
because of this strategy. The lack of aggressive promotion
meant that our brands could not be retained. We are therefore
required to combine the two. If investments in the brand are replaced
by promotions, the industrial role of an A-brand is abandoned
and we compete on the same grounds as private label.
It would be surprising for Pepsi to cut out brand investments.”
Where will innovation in non-alcoholic beverages and juices
come from? Private label or A-brands?
“The truth is, there is frequently no breakthrough innovation,
only improvements of the product, which can occur on different
levels: manufacturing, packaging or on product level. Innovations
in manufacturing are often not perceived by consumers,
and need to be communicated extensively. Consumers do tend
to benefit, but more at an ethical level (like for example a better
carbon footprint), which is highly determined by subjectivity.
The packaging market has been very static for years, so limited
innovations there. Innovations are more sophisticated at product
level, specifically with regard to raw material sourcing, which
can create different product qualities. Take sanguine orange, for
example – our competitive edge comes from our exclusive sourcing
from Sicily. It remains unique on the market because no one
has ever succeeded in finding an equivalent, but that has led to
limited innovation.”
Can private label products enable growth
in product categories?
“I feel that indirectly private labels are the spur of growth in
A-brands. In a market where there is no competition on brand
level, such as in tea beverages, private labels are replacing the
alternative A-brand and force us to be more efficient (quality,
price, etc.). In a competitive market, they are the custodians of
the relation with the consumers. By this, I mean that a lower
price private label prevents A-brands from losing contact with
reality. In general, private label have an important social role in