PepsiCo India to set up low-cost foods unit as buy out talks with Balaji Wafers fail

After repeated unsuccessful attempts to buy out Gujarat-based snacks majors such as Balaji Wafers and A-Top Foods Products, beverage and snacks maker PepsiCo India is in the process of creating its own low-cost foods business and increasing manufacturing capacities across its plants.

To be called ‘foods value’ business, the new entity will be in addition to the company’s existing divisions for beverages and foods, which operates under Frito-Lay India. While Frito-Lay remains category leader in the Rs 3,000-crore salty snacks market with four local brands—Lehar, Uncle Chipps, Aliva and Kurkure—which hold a combined 55-60% share, the multinational has been consistently losing share to local strongholds like Balaji and A-Top in the West and Haldiram and Bikanervala in the North.

The proposal to set up the new entity was announced internally about a month back.

Details of the new foods value division are yet to be finalised, a PepsiCo spokesman said in response to a query by Economic Times.

However a company official in direct knowledge of the upcoming project, requesting not to be named, said: “The foods value project is looking to focus on low-cost fortified snacks like biscuits or snacks priced at Rs 2-3 a pack, which PepsiCo would target at rural consumers.”