Pepsi's Entry into India: A Lesson in Globalization

Production increased from 4.24 million tonnes in 1991-92 to 5.44 million tones in 1995-96. The company's use of high yielding seeds was regarded as one of the reasons for the increase in productivity in tomato cultivation during the same period. Commenting on the above issue, Abhiram Seth, [Seth, the company's Executive Director (Exports and External Affairs)] said, "When we set up our tomato paste plant in 1989, Punjab's tomato crop was just 28,000 tonnes, whereas our own requirement alone was 40,000 tonnes. Today, the state produces 250,000 tonnes. Per hectare yields, which used to be 16 tonnes, have crossed 50 tonnes." Pepsi was, however, not as successful in the chili contract farming venture that was started soon after the tomato venture stabilized...

In 2000, the company's exports added up to Rs 3 billion. The items exported included not only processed foods, basmati rice and guar gum , but also soft drink concentrate. Though the company did not make the figures public, in all probability, the portion of soft drink concentrate in its exports was much higher than that of any other product. In fact, the company met the soft drink concentrate requirements of many of its plants worldwide through its Indian operations. Even by 2000, of its annual requirement of 25,000 tonnes of potatoes per annum, Pepsi got only 3,000 tonnes from its contract farmers. Given these figures, it would be interesting to see how it planned to achieve its objectives of meeting its complete requirement of potatoes through the contract farming route by 2004...