Domino’s seeks to terminate Indian partnership with Coca-Cola for PepsiCo

ASIA – Domino’s Pizza, the American pizza restaurant operated by Jubilant Food-Works (JFL) in India is seeking to end its global partnership with Coca-Cola in India, with possibility of swapping it with its rival PepsiCo, two officials aware of the matter revealed.

According to ET Retail, Domino’s is in active negotiations that may see the end of the 20-year exclusive deal with the world’s largest soft drinks company in an effort to achieve cost savings.

Pepsi, which is battling Coca-Cola for a shrinking soda market share could be a possible partner for Domino’s.

“We have enjoyed a strong partnership with Coca-Cola India over the last 20 years.

As we look to build our business for the next phase of growth, we have initiated a process to look at various options and identify the right beverage partner who can help strengthen our beverage portfolio and drive growth,” said a JFL spokesperson.

ET Retail reported PepsiCo was called to present its contract terms to JFL last week.

As the population shifts away from ‘sugary’ options together with stiff competition in the segment, Pepsi has in the past diversified away from drinks but it seems to be bringing back its focus on fixing the fizzling beverage division even as competition from Coca-Cola stiffened.

However, in the middle of shifting tastes especially for the Americans, they both have expanded their portfolios of beverages, putting less emphasis on their core brands.

Speaking on the development Lloyd Mathias, former senior PepsiCo executive and business consultant said: “Large food chains may switch their beverage exclusivity for better commercial terms and stronger advertising and marketing support. Sometimes it may also be to shake up the status quo by injecting a competitive element.”

Present in 85 countries globally, Michigan-based Domino’s Pizza has formed exclusive partnership deals with Coca-Cola worldwide, with only a few exceptions such as Australia, New Zealand and Malaysia where it serves PepsiCo brands.

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While rivals such as McDonald’s has partnerships with Coca-Cola, Yum! Brands which operates Pizza Hut, KFC and Taco Bell, has had a long-standing partnership with PepsiCo.

India, a critical market for Domino’s

India whose dining habit is reported to be accelerating is attracting investments from quick service restaurants such as Domino’s who are gearing up for a larger share of the significant market.

Jubilant Foodworks, operator of Domino’s Pizza in India, posted a net profit of US$9.77mn having benefited from Domino’s value pricing and menu innovations.

Same store sales in the quarter went up 26% YoY and the company expects an acceleration in store expansions from the second quarter onwards.

Domino’s Pizza has a store count of 1,144 and is the single largest quick service restaurant in the country thus, beverage deals were significant in enhancing business expansion.

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