Term paper

On

PepsiCo Kraft and Kellogg’s Business & Product Offerings in Asia

International Business(ITB 301)

Sec-2

Submitted To:

Jashim UddinSenior Lecturer

Department Of Business AdministrationEast West University

Submitted By:

Sk. Shanjida Rahman ID: 2006-3-10-080

Shah Jabin ID: 2007-1-10-128

Md. Habibur Rahman ID: 2007-2-10-018

Zaedur Rashid ID: 2007-2-10-018

Afsana Akter ID: 2007-2-10-130

Date of Submission: 21st April, 2009

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Acknowledgement

First of all, we would like to thank our course instructor Mr Jashim Uddin for giving us

such a term paper. We are glad to see that he has faith on us so that we are given this

work. Term paper is a very important part of our academic curriculum. It helps us to

know about the topic widely. While doing this task, we had to visit websites to know

more about that company and the variety of the product. It has increased our knowledge

about the giant multi national companies, their operating countries and variation of

products in different regions. It also made us efficient to search any information and

browsing the sites. Moreover, now we know about the different attributes of the products

and company’s future target and goal.

Last but not the least; we would like to thank our friends who helped us to find these

information and data. Without their assists, it would have been very difficult to complete

this term paper.

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Table of Contents

Executive Summary 3

Limitations of the study 4

Objective of the Report 5

Methodology 5

Findings 5

PepsiCo 6

Kraft 11

Kellogg’s 12

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Executive Summary

PepsiCo, Kraft and Kellogg are the some biggest food and beverage industries in world.

They have their business operation all over the world. But not everywhere the business

pattern is same. Somewhere they have foreign direct investment, somewhere they have

franchise and somewhere they have exports. As all the information is not available in

these corporate giants’ websites, it is very difficult to collect some data. Some

information was not at all collectable. With this limitation of data, these companies’

history in Asian region, direct business and different product offerings is analyzed. These

companies have the foreign direct investment not in so many countries. In fact, there are

only few countries where they are running their direct business operations. It is not

possible for companies enter everywhere and run the business on their own, no matter

how big the company is. So they have business through the franchising. Here, some local

companies are given license to produce their product. They get the royalty and part of

profit from this franchisee. On the other hand, in some countries they have neither direct

business nor franchise. For these countries, export is the only way of business. Some

local organization gets the permission to import these companies’ products to that

particular country and market the products. So that the there is a huge product variation

from country to country.

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Methodology

To prepare this report, standard methods, of report writing have been used. For writing

this report different types of data were needed to complete, tabulate and analyze. The

required data were collected by using secondary sources. For collecting data from

secondary sources, company websites, newspapers and other materials were used. After

completion of the data, these were sorted into different categories. And on the basis of

this analysis the findings of the report were made.

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Objective of the Report

The objectives of the report are:

1. To find out the Kraft, Kellogg and PepsiCo’s direct business in Asian countries.

2. To know the companies’ history in the Asian region.

3. To know the variety of products of these companies in this area.

4. To know these companies’ type of business operation in different Asian

countries.

5. To know about these three companies more.

Limitations of the study

In the full course of report writing the researches have gone through several limitations

which are:

1. Information regarding the report was limited.

2. Time for writing report was limited.

3. Element for writing report was insufficient.

4. Lack of the part of experience of the group members.

5. Shortage of adequate manpower.

Findings

The findings of the report are as follows

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PepsiCo’s FDI in Asia

PepsiCo has foreign direct investment (FDI) in India, Japan and China among the Asian

countries.

Previously, they also had FDI in Burma (formally known as Myanmar) but they had to

withdraw their investment from there. They started the business by joint venture with the,

Thein Tun, was a noted business partner of the ruling Burmese military junta

government. This government has the worst human rights violation in the world. So

PepsiCo have to face the protest of the human rights activists and the association along

with the oil giants Texaco, Unocal, Amoco, and Petro-Canada

PepsiCo’s History of Operation in Asia (India)

PepsiCo gained entry to India in 1988 by creating a joint venture with the Punjab

government-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited.

This joint venture marketed and sold Lehar Pepsi until 1991, when the use of foreign

brands was allowed; PepsiCo bought out its partners and ended the joint venture in 1994.

Others claim that firstly Pepsi was banned from import in India, in 1970, for having

refused to release the list of its ingredients and in 1993, the ban was lifted, with Pepsi

arriving on the market shortly afterwards. These controversies are a reminder of "India's

sometimes acrimonious relationship with huge multinational companies." Indeed, some

argue that PepsiCo and The Coca-Cola Company have "been major targets in part

because they are well-known foreign companies that draw plenty of attention."

In 2003, the Centre for Science and Environment (CSE), a non-governmental

organization in New Delhi, said aerated waters produced by soft drinks manufacturers in

India, including multinational giants PepsiCo and The Coca-Cola Company, contained

toxins, including lindane, DDT, malathion and chlorpyrifos — pesticides that can

contribute to cancer, a breakdown of the immune system and cause birth defects. Tested

products included Coke, Pepsi, 7 Up, Mirinda, Fanta, Thums Up, Limca, and Sprite. CSE

found that the Indian-produced Pepsi's soft drink products had 36 times the level of

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pesticide residues permitted under European Union regulations; Coca Cola's 30 times.

CSE said it had tested the same products in the US and found no such residues. However,

this was the European standard for water, not for other drinks. No law bans the presence

of pesticides in drinks in India.

The Coca-Cola Company and PepsiCo angrily denied allegations that their products

manufactured in India contained toxin levels far above the norms permitted in the

developed world. But an Indian parliamentary committee, in 2004, backed up CSE's

findings and a government-appointed committee, is now trying to develop the world's

first pesticides standards for soft drinks. Coke and PepsiCo opposed the move, arguing

that lab tests aren't reliable enough to detect minute traces of pesticides in complex

drinks. On December 7, 2004, India's Supreme Court ruled that both PepsiCo and

competitor The Coca-Cola Company must label all cans and bottles of the respective soft

drinks with a consumer warning after tests showed unacceptable levels of residual

pesticides.

Both companies continue to maintain that their products meet all international safety

standards without yet implementing the Supreme Court ruling. As of 2005, The Coca-

Cola Company and PepsiCo together hold 95% market share of soft-drink sales in India.

PepsiCo has also been accused by the Puthussery panchayat in the Palakkad district in

Kerala, India, of practicing "water piracy" due to its role in exploitation of ground water

resources resulting in scarcity of drinking water for the panchayat's residents, who have

been pressuring the government to close down the PepsiCo unit in the village.

In 2006, the CSE again found that soda drinks, including both Pepsi and Coca-Cola, had

high levels of pesticides in their drinks. Both PepsiCo and The Coca-Cola Company

maintain that their drinks are safe for consumption and have published newspaper

advertisements that say pesticide levels in their products are less than those in other foods

such as tea, fruit and dairy products. In the Indian state of Kerala, sale and production of

Pepsi-Cola, along with other soft drinks, was banned by the state government in 2006,

but this was reversed by the Kerala High Court merely a month later. Five other Indian

states have announced partial bans on the drinks in schools, colleges and hospitals.

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PepsiCo in Burma

From 1991 until 1997, PepsiCo was one of the most notable companies to do business in

Burma. PepsiCo's business partner, Thein Tun, was a noted business partner of the ruling

Burmese military junta, which has been alleged to be responsible for some of the worst

human rights violations in the world.

PepsiCo's involvement prompted one of the biggest Burma-related boycotts in history.

The campaign was on a par with those against Texaco and Unocal, running around the

same time, and currently against Total Oil.

PepsiCo formally began their investment in Burma in November 1991 when they opened

a bottling plant in the then-capital Rangoon, despite the call by Aung San Suu Kyi and

the National League for Democracy for companies to avoid doing business in Burma

until it returned to democracy. The campaign against Pepsi was initiated by the Asian-

based Burma Rights Movement for Action. The campaign later gained growing strength

in the West as Burmese human rights groups focused on campaigns against companies in

Burma, including the oil giants Texaco, Unocal, Amoco, and Petro-Canada.

When Petro-Canada left Burma, Canadian and U.S. based Burmese democracy groups

sharpened their focus on PepsiCo. The campaign received a massive boost when, in 1996,

the Free Burma Coalition took the lead in forcing Pepsi out of American universities.

This included the scrapping of a multi-million dollar deal at Harvard.

The campaign also spread to Europe, where the UK-based organization, Third World

First, adopted the boycott. In response, in 1996, PepsiCo attempted to step out of the

spotlight by selling its share of its Burmese joint venture to its partner but retaining its

Burmese franchise agreement. Aung San Suu Kyi responded, "As far as we are

concerned, Pepsi[Co] has not divested from Burma" and both human rights and

environmental groups continued the pressure on Pepsi. Eventually, with the Burmese

regime holding violent anti-democracy rallies and pressure from around the world

mounting, PepsiCo announced in January 1997 that it would cut all ties with Burma.

However, to this day, PepsiCo has not admitted that it was morally wrong to invest in

Burma as some other companies have upon leaving the country.

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PepsiCo’s product attributes

PepsiCo produces 5 types of food items such as:

Sports drinks - GATORADE

Healthy foods – QUAKER

Beverages – PEPSI

Chips –FRITTO-LAY

Fruit juice- TROPICANA

There are different product lines of these product mixes.

They have product differentiation mainly between North America and outside there.

PepsiCo has foreign direct investment (FDI) in India. The company’s products in Indian

plants are:

Cheetos

Uncle chips

Lays

Lehar

Kurkure

Quaker

Pepsi

7up

Mirinda

Mountain Dew

Tropicana

Twister

Gatorade

Aquafina

Dukes

Among these products, 7up and Kurkure are not their home country products. Kurkure is

born in India with its own taste and flabour in this country.

On the other hand, PepsiCo do not have direct business in Bangladesh, here they have

franchising with Transcom who produces only beverages such as:

7up

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Pepsi

Mirinda

Mountain Dew

Teem

Other products of this company are generally imported. The imported products are

Kurkure

Lays

Gatorade

Tropicana

Quaker

People of a particular country are not generally associated with products which are not

produced in their own country. They get information of new products through

advertisements. They consume those products which are available to their country, has

some national interest and has reasonable price. So imported products have higher price

than the local products as tariff is included to that item. So people have less consumption

to those products. They have more emphasis on the local.

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Kraft’s FDI in Asia

Kraft have has foreign direct investment (FDI) in Greater China is composed of the

markets of the People's Republic of China, Taiwan and Hong Kong among the Asian

countries.

In Greater China, Kraft operates manufacturing facilities in Beijing and Suzhou

(biscuits), Tianjin (powdered beverages), and Guangzhou (coffee). In addition, they are

building a brand new biscuit plant in Beijing.

In the other Asian countries they have the business by exporting mostly.

Kraft’s History in Asia (Greater China)

1982 -- General Foods (merged with Kraft later) entered joint venture with President

Corporation in Taiwan

1984 -- Kraft established two joint ventures in P.R. China for Powdered Beverage and

Coffee;  Nabisco established joint venture with Beijing Yili Food Company

1988 -- Nabisco launched Ritz and Marbu -- Focus on Beijing and Tianjin only

1989 - United Biscuit established joint venture in the South

1994 -- Kraft bought out partners share and formed wholly owned company

1995 -- Nabisco established branch in Taiwan after acquiring Lucky, a local biscuit

company; Kraft acquires interest in Beijing Dairy business; Nabisco launched Trakinas in

Beijing

1996 -- Nabisco completed construction of new Beijing and Suzhou bakeries; Launched

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Oreo and Chips Ahoy!

2000 -- Nabisco acquired United Biscuits Greater China business; Kraft acquired Nabisco

2001 -- Kraft completed sale of Beijing Kraft Dairy business

2005 -- Kraft announced building of new biscuits plant in Beijing

2006 -- Kraft consolidated into new holding company, Kraft Foods (China) Company

Limited.

Kraft Foods is the second largest food and Beverage Company in the world and one of

the Greater China's leading food and beverage companies. We are a leading player in two

categories- Powdered Beverages and Biscuits- and growing well in our Coffee business.

Kraft markets many famous brands in Greater China: Pacific, Oreo, Chips Ahoy!, Ritz,

Trakinas, Tang, Maxwell House, Kraft Singles, Philadelphia, Toblerone, Planters, Lucky,

Miracle Whip and O'Smile.

Over the past ten years, Kraft has invested more than US$ 200 million in China. Kraft

Foods is committed to Greater China for the long term and uses global technologies to

continue developing new products tailored to local tastes. We employ more than 2,500

people across the Greater China area.

Quality is the first ingredient in everything we make. Nothing takes a higher priority. In

Greater China, we follow all local laws and regulations and provide products that meet

Kraft's global quality and hygiene standards, which often exceed local standards.

In China, Kraft's Research and Development Centers are in Suzhou and Guangzhou. The

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researchers leverage Kraft's global technology and fully utilize resources provided by

local suppliers and research institutes to maintain product competitiveness and provide

products that meet consumer's health and taste requirements.

Kraft is deeply committed to growth in Greater China. With a history of local operations

dating back to 1982, we remain committed to this market and its people. We plan to grow

by introducing global new products and tailoring them to local tastes. In that way we will

accomplish our vision of helping people around the world eat and live better, and will

keep our steadfast promise to remain focused on quality, innovation, and responsible

growth, both now and in the future.

Kraft’s product attributes

Kraft foods have four types of product mix. They are:

o Health & Wellnesso Quick Mealso Snackso Premium

Pacific - Pacific crackers, including Pacific Soda, Pacific Digestive and Pacific Milk

Cracker, are local products developed for the Greater China market. Pacific's healthy

goodness and taste have made them Greater China's #1 soda cracker.

Oreo - Created in the U.S. in 1912, Oreo has been popular there for almost a century. In

Greater China, it is renowned for the way it is eaten - "Twist, lick & dunk".  It quickly

became one of the country's top-selling cream-filled cookie brands. Kraft has brought

Oreo innovations quickly from the U.S. to China. Today there are two more members in

the Oreo brand family- Chocolate Oreo and Double Delight Oreo. Additionally, the new

Oreo Wafer launched at the end of 2005 has quickly won over consumers in China.

Ritz - Ritz has been a favorite in the United States for generations. In order to meet the

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needs of this market, Kraft developed Ritz Chips and a range of new sandwich flavors

consisting of sweet-and-savory combinations including yogurt, strawberry milk, cheese,

and pizza.

Chips Ahoy! - The unique combination of crunchy cookies and taste of chocolate soon

became popular amongst consumers. After the launch of Original Chips Ahoy! Kraft

developed coffee and nut flavors.

Trakinas -Trakinas are fun biscuits with uniquely funny faces that have proved quite

popular with Chinese consumers. Brand awareness has grown quickly, and the Trakinas

range includes a variety of flavors such as chocolate, strawberry, peanut butter, and

double cream. 

Tang - Tang powdered beverage was launched in China in 1986 and has since developed

into a trusted brand among Chinese consumers. While most often associated with its

distinctive orange flavor, Tang actually has eight flavors in China, including lemon,

pineapple, apple, peach, grape, and mango. To create more opportunities for consumers

to drink Tang we launched two more new flavors - Fruit Tea and Milk Mixer. Tang is

rich in Vitamin C worldwide. Because Chinese consumers have a high awareness of

nutritional and vitamin deficiencies, Kraft has also added iron, calcium and vitamin B to

Tang in China. A new Ready-To-Drink Tang was also launched in 2006.

Maxwell House - Maxwell House has a proud heritage dating back more than 100 years. 

Because coffee is relatively new to China in the middle of 1980s, Kraft developed a 3-in-

1 variant consisting of coffee, milk powder, and sugar. In the past few years, Kraft's

coffee business has expanded rapidly in Greater China.  As consumers' taste for coffee

becomes more diverse, we've moved beyond the original flavors (Regular, Mocha,

Vanilla, and Orange) and launched Iced Coffee for seasonal changes as well as Rich

Coffee. In addition, we launched an innovative range of "New Age" flavors including

Latte and Cappuccino.

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Miracle Whip - Miracle Whip brand originated in the United States, and it has been

popular with consumers for more than 30 years. Special spices give Miracle Whip its

unique taste-one reason why it's the market leader in the spoonable category. Years ago,

Kraft launched Miracle Whip Fruit Salad Dressing, an innovative product variation

especially tailored to the Hong Kong market.

Singles - Kraft Singles were the first sliced cheese product to be individually wrapped for

convenience. Each slice contains 240 mg of natural milk calcium, making Singles

popular among mothers who want their children to grow up healthy and strong. In

addition to Regular Singles, Kraft has launched Light Singles and Fat Reduced Singles.

Philadelphia - Delicious and healthy, Philadelphia cream cheese has 60 percent less

calories than butter and margarine and is one of the food industry's most popular brands.

Philadelphia is the number-one cream cheese in Hong Kong and Taiwan.  Innovative new

variations keep consumers coming back to try flavors such as Salmon, Chive & Onion,

Strawberry, and Pineapple.

Toblerone - Created in Switzerland in 1908. Toblerone Chocolate blends Swiss milk

chocolate with honey and almond nougat. At the same time, its clever packaging and

chunky triangular shape have helped Toblerone become of the world's most highly

differentiated confection brands. 

Planters - Created in the United States in 1906, Planter's provides nothing but fresh nuts

of superior quality, all carefully picked, sized, and graded. It has been Hong Kong's

number-one nut brand for 30 years.

Lucky - Lucky is one of most popular biscuits brands in Taiwan with a long history.

Lucky owns the strong image of "Family Favorite" through a great-tasting range of

biscuits that vary from savory to sweet and light to filling. It comes in a range of

delicious flavors including Butter Coconut, Light Cracker, Egg Roll, Lucky Pie, Flute

Wafer, and Thin Cracker. 

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O'Smile - Popular local O'Smile brand Taiwanese biscuit was introduced in1981. In

order to build up a healthy brand image, O'Smile has introduced new varieties such as:

Cream Cracker (cheese, seaweed, spring onion and vegetable), Vegetable Cracker, Grain

Cracker (Multi Grains, Raisin), and Milk Cracker.

As these products are produced in China, Kraft is more concerned about the Chinese

people. They design the product according to the demand of the Chinese people. They

also have business in other countries, these are basically franchising and exports.

In Bangladesh, Kraft’s product is imported by. People are more familiar with TANG as it

is marketed by Sajeed Corporation. In this country for a long period. Here, people are not

familiar much with the other products of Kraft. As it a developing country, people have

time to make food for their meal rather than purchasing the quick meals. People are not

also familiar with the premium categories products. So people like to purchase some

health & wellness products such as TANG. Some people are also familiar with the snacks

such as TOBLERONE but the number is very few.

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Kellogg’s FDI in Asia

Kellogg has foreign direct investment in South Korea, Japan, Thailand and India.

They are now planning to have their FDI in China by purchasing an existing company.

(Source: http://news.bbc.co.uk/2/hi/business/5156578.stm)

Kellogg’s history in Asia

The company has not exposed about their history in this Asian region. However, they

exposed about their business plan for future growth in Asia. They already have direct

business operation in South Korea, Japan, Thailand and India. Their future plan is to

make FDI in China through the “buy” strategy. They want to buy an existing company to

have their direct business operation as early as possible. China is a huge and attractive

market place for every single company.

Kellogg’s product attributes

Ready-To-Eat Cereals

As the world’s leading cereal maker, Kellogg Company focuses on bringing our best to

consumers each day. Our commitment to innovation and brand building keeps us at the

forefront of the cereal market. We offer an assortment of adult and kid cereals to meet

your changing taste preference and nutritional needs. Our cereals are a great way to start

your day.

APPLE JACKS

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100-Calorie Packs

At 100 calories per pack, Kellogg offers you scrumptious snacks you  can feel good

about. Cheez-It®, Chips Deluxe®, Keebler® Fudge Shoppe® and Kellogg's® Sandies®

offer delicious snacks in 100-calorie packs. Whenever you're in the mood for a snack that

won't weigh you down, reach for Kellogg 100-calorie selections.

CHEEZE IT

Baking

The next time you head to the kitchen to prepare your favorite recipe, there’s a good

chance your list of ingredients will include a Kellogg baking product. From scrumptious

cookies and pie crusts to cereal favorites and stuffing mix, Kellogg offers a variety of

delicious choices to satisfy everyone’s tastes.

ALL BRAN

Beverages

Kellogg offers you an assortment of nutritious, refreshing beverages in several thirst-

quenching flavors.

ALL BRAN

Cookies

Kellogg offers some of America’s most popular cookie brands, including Keebler®,

Carr’s®*, Famous Amos® and Murray®. You’ve come to trust the delicious taste of our

many cookie products, and the many varieties are great for snacking at home or to take

with you when you’re on the go.

AUSTIN

Crackers

Kellogg is proud to offer consumers a wide variety of delicious crackers in a range of

popular flavors. From established favorites to fantastic-tasting new varieties, Kellogg has

crackers to fit any taste and lifestyle.

CLUB

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Frozen Breakfast

Start your day by enjoying a great-tasting Kellogg frozen breakfast. Choose from a range

of easy-to-prepare breakfast selections, including Eggo® waffles and pancakes,

Morningstar Farms® veggie meals and Special K® waffles.

EGGO

Fruit-Flavored Snacks

Our fruit-flavored snacks let kids have fun with their favorite characters. Fruit-flavored

snacks come in a variety of flavors and shapes, and are fortified with Vitamin C.

ROLLS

Pop-Tarts® Toaster Pastries

Great-tasting Kellogg’s® Pop-Tarts® toaster pastries are fully baked and ready to eat

right from the box, or you can warm them in the toaster. And many varieties are

exceptionally delicious frozen. Pop-Tarts provide seven essential vitamins and minerals.

They contain zero grams of trans fat, and they are available in a variety of favorite

flavors. When you’re on the go, take along Go-Tarts™ snack bars – everything you love

about Pop-Tarts, now in a bar.

POP TARTS

Snacks and Bars

Whether you’re on the go or relaxing at home, Kellogg offers a range of great-tasting

snacks and bars to suit most any taste and lifestyle.

CHEEZ IT

Syrup

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Kellogg’s® Eggo® syrups are great when served over Eggo® waffles, pancakes, French

toaster sticks – or your favorite homemade French toast recipe. Available in a wide range

of delicious flavors, our Eggo® syrups feature perfect-pour, no-drip spouts to keep your

hands and countertops clean

EGGO

Vegetarian

We feature a complete line of delicious veggie foods that are made using methods and

ingredients designed to help you see veggies differently. All of our vegetarian products

are as delicious as they are nutritious. Brands include Morningstar Farms®, Morningstar

Farms® Organic and Natural, Worthington®, and Worthington® Loma Linda®.

MORNING STAR

All these products are familiar in those countries (in Asia) where the company has direct

business. Somewhere the company has franchise and some places it has export.

As far as Bangladesh is concerned, Kellogg products are imported by Nestle Bangladesh

Limited. It has export its product to market it. Most of the people are not aware of the

majority of the products. Some people are familiar with the corn flakes but the number of

consumers is not too big.

People of India, Thailand, Korea and Japan are mainly familiar with the products as there

is FDI. So product variation is found in those countries. The company does not export

much of the product varieties to the developing countries like Bangladesh.

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Source

www.kellogs.com

www.pepsico.com

www.kraft.com

www.bbc.co.uk

www.pepsicoindia.co.in

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