INDIA – Tata Global Beverages and PepsiCo India have agreed to review the terms of their agreement in NourishCo Beverages, a joint venture the two companies formed a decade ago, reports ET Retail.
The review will enable both companies to house their individual business expansion plans while at the same time continue to execute their restructuring initiatives.
The key triggers for the revision include the Tata’s move to become a larger player in the food and beverages space that could include it stepping into PepsiCo’s space.
On the other hand, PepsiCo India is no longer in the bottling business after selling its bottling operations to the Ravi Jaipuria group.
“The objective is to redraw boundaries of the joint venture; since PepsiCo has an extensive portfolio in snacks, the concern is that the JV should not step on to PepsiCo’s turf with forthcoming launches,” one of the officials said.
According to media reports, both partners confirmed the revision in the JV agreement for NourishCo, formed to sell products in the non-carbonated readyto-drink hydration space.
PepsiCo and Tata Gloal Beverages said that the move will not affect the current business of the JV, which primarily includes marketing and distribution of branded products Tata Gluco Plus, Tata Water Plus and Himalayan Natural Mineral Water, within the liquid beverage category.
In May last year, Tata Group had announced consolidation of all its consumer products business with all branded food businesses of Tata Chemicals.
This will see Tata all its packaged spices, pulses and salt being merged into Tata Global Beverages in an all-stock deal and thereafter renamed as Tata Consumer Products Limited.
The company now plans to expand the food and beverages business that currently includes tea, coffee and water risks making its relationship with PepsiCo tenuous, said one the officials.
Tata Consumer Products is expected to leverage synergies in the combined entity within marketing, sales and distribution, and compete directly with Britannia, ITC, Nestle and PepsiCo in foods business.
Another official said this could be beginning of scaling down of the joint venture, with PepsiCo having franchised its entire bottling business to RJ Corp earlier last year.
“The revision the terms of the JV will also have to consider the association with RJ Corp-owned Varun Beverages which now does bottling, sales and distribution for PepsiCo,” the official said.
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