The country's largest food service operator, Jubilant FoodWorks, announced it was appointing PepsiCo as its beverage partner for Domino's Pizza. This ends a two-decade partnership with Pepsi's arch-rival, Coca-Cola.
The move, it said, was in line with global realignments, and would bring a fresh perspective and focus to its beverage business within stores. Jubilant runs 1,167 Domino's stores in India, according to its results for the July-September period.
The partnership will see PepsiCo's portfolio of carbonated drinks -- including Pepsi, Mountain Dew, 7Up and Mirinda, along with Lipton Ice Tea -- available at all Domino's outlets in the country. The beverages will also be sold in all new stores of the brand, the company said on Tuesday.
"We are delighted to announce PepsiCo as our beverage partner. We look forward to greater beverage variety, thereby enhancing the Domino's Pizza experience," stated Pratik Pota, chief executive officer and whole-time director at Jubilant.
With this, PepsiCo consolidates its hold in the domestic food service market, being available now in most fast-food outlets, including Pizza Hut, Burger King and Subway, beside Domino's, says those tracking the market.
Coca-Cola will be associated with mainly one major fast-food brand, McDonald's, where it will continue to serve beverages, industry sources said. The company's decision to bring down its engagement with fast-food companies, say experts, also comes as it sets its sights on rejuvenating Costa Coffee in India, following a global acquisition in August. This will give Coca-Cola a retail footprint in the country, allowing the firm to push its products through this channel, since beverage deals with fast-food majors are intended for that, the experts said.
"In many respects, beverage-fast food company deals help in improving consumer connect for both partners. But, beverage companies have an advantage with deals like this, especially when test-marketing a new product, since they have a captive base visiting fast-food outlets," said Abneesh Roy, senior vice-president at Edelweiss. "The data from these sampling and promotional exercises really help them in understanding the efficacy of a product."
The stock of Varun Beverages, which is PepsiCo's bottler in India, was up 11 per cent on the BSE exchange after the Jubilant announcement. The share price settled at Rs 805.85 at the close of trade, up 6.7 per cent over Monday's close.