Mumbai, Jan. 16: Hindustan Lever (HLL) and Pepsi Foods today entered an alliance that will see each other marketing HLL’s portfolio of leading hot beverages and Pepsi’s soft drink brands.
The tie-up, said to be the first of its kind, is considered a master-stroke in the fiercely competitive FMCG arena as both companies can now leverage on each other's distribution strengths and reach hiterto uptapped areas.
Among the duo, while HLL has 15,000 vending machines and Pepsi around 500 such outlets, both have different strengths. HLL is powerful on the ‘institutional side’ with a large presence in factories, offices, railways stations while Pepsi is strong on the retail front which comprises shops, restaurants, cinema halls and multiplexes.
“With this alliance, HLL can offer hot beverages through Pepsi’s distribution network as part of its strategy to infuse new growth in the entire category of liquid refreshment beverages,'' HLL said in a statement today.
The alliance will make available leading brands of the two majors — Lipton, Taj Mahal, Bru, Pepsi Cola, 7Up, Mirinda and other popular carbonated soft drinks through vending machines and fountains.
In addition to the plain variety, hot tea will be available in Cardamom, Diet Cardamom, Ginger and Masala flavours, while hot coffee will have three varieties, Pure, Cappuccino and Mochaccino.
Senior HLL officials pointed out that the objective of the whole exercise, apart from leveraging on each other's strengths, was to fully tap the vast potential in the ‘out of home’ consumption of tea or coffee. “A huge opportunity lies there as consumption of hot beverages is mostly outside home,” an HLL official said.
HLL said that it brings to the alliance a well-established presence and brand value in hot beverages, outstanding product development and backward integrated sourcing capability, expertise in vending and an extensive institutional channel base.
On the other hand, Pepsi has strong brands, rich expertise in premise retailing of cold beverages, extensive sales and distribution infrastructure, and a well developed network of retail outlets and dealers who sell Pepsi through fountain machines.
“The partnership leverages each other's strengths with an unbeatable business model that creates a powerful distribution base to market a unified portfolio of popular hot beverages and soft drinks through a combined fountain, vending and institutional initiative. The area of collaboration for these two organisations will be in vending hot tea and coffee along with soft drinks across the country,” HLL said.