Saturday March 20, 2010

Permanis’ ties with PepsiCo still strong


KUALA LUMPUR: Permanis Sdn Bhd is confident it will not suffer the same fate as its rival Fraser & Neave Holdings Bhd (F&N), which will be parting ways with beverage giant The Coca-Cola Co, as Permanis’ business strategy is in line with that of its franchise partner PepsiCo Inc.

Permanis president and chief executive officer Erwin Selvarajah said the relationship between the company and PepsiCo was strong as both shared the same business direction in terms of product range.

“Every type of beverage, carbonated and non-carbonated, that PepsiCo has in its range, Permanis too has it. Our tie-up with PepsiCo started in 1973 when we introduced Pepsi to the Malaysian market. We then expanded the range to other beverages such as juices, tea and sports drinks in line with that of PepsiCo’s products.

“Whereas Coca-Cola, although it has an extensive range of products, it only had two brands in Malaysia, namely Coke and Sprite. Naturally, as a large multinational corporation, Coca-Cola wanted to bring its whole range into the country but was not able to do so unlike PepsiCo. This was probably the reason for the split,’’ he said during an interview.

Permanis is the official bottler, maker and distributor of PepsiCo brands in Malaysia.

PepsiCo (M) Sdn Bhd marketing manager (light refreshment beverages) Melati Abdul Hai said she did not foresee PepsiCo having its own bottling plant in the country as the relationship between the companies over the years had led to each having its own expertise and strengths.

“It is the collaboration between the two that has gotten both to where they are today across different products. We have always been a franchise model globally since we started,” she said.

Coca-Cola via its Malaysian unit, Coca-Cola Bottlers (M) Sdn Bhd, would be taking over the bottling and distribution operations once its existing franchise agreement with F&N expires next September.

To this end, it hopes to have its RM1bil state-of-the-art bottling plant at Enstek Technology Park in Nilai operational before the transition agreement expires.

Asked whether the split between F&N and Coca-Cola would impact Permanis’ business, Selvarajah said it would not, as there would be two different companies with split portfolios unlike Permanis with its comprehensive portfolio.

PepsiCo launched its new logo in Malaysia at the end of last year after unveiling it in the United States some months earlier, following a rebranding exercise.

The new global identity was a natural part of the creative and strategic process of PepsiCo’s new Refresh Your World philosophy, which was based on enabling youth to create positive change to impact the world in which they lived, said Melati.

“PepsiCo sees 2010 as the start of a Decade of Youth. The new brand identity provides a visual signal that the brand has something new to say. The new global brand proposition Refresh your World underpins the changes PepsiCo is making and the logo redesign marks just one step in this transformative process,’’ she noted.

According to Selvarajah, Permanis would be spending RM5mil to RM6mil to promote its new identity and expect sales growth in the “teens” in the next 12 months.

He said PepsiCo’s market share in the local cola segment was 35% compared with Coca-Cola’s share of 60% but it (PepsiCo) was still number one in the juices and tea segment in the country.

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