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Snack Food Shops Fear Pepsico’s Appetite for Indian Crunchies

December 14, 1995

NEW DELHI, India (AP) _ Last time the flap was over Kentucky Fried Chicken. This time it’s a crunchy Indian snack.

Hundreds of shops making the spicy snack in a northern state are opposing PepsiCo Inc.’s foray into the business, fearing the multinational concern from Purchase, N.Y., will end their 125-year dominance of the market.

The controversy is over ``bhujiya,″ a mouthwatering fried noodle eaten with nearly all meals by many people across northern India. Much of the snack is made in Bikaner, a town in the desert state of Rajasthan.

A secret blend of spices, lentils and salt water used by the town’s manufacturers has made Bikaner a household word in India.

About 50,000 people in Bikaner’s 325 shops produce and distribute 30 tons of the irresistible crunchies every day across India. One-fifth of that is exported to the United States, England, Germany and the Middle East, according to Khewarchand Mushraf, president of the Bikaner Bhujiya and Pappad Association.

All that is being challenged by PepsiCo’s snacks division.

``Pepsi will wipe out the entire industry in Bikaner,″ Mushraf said. ``We cannot match their marketing aggressiveness nor their money,″ he said in a telephone interview.

The dispute comes as Kentucky Fried Chicken, a subsidiary of PepsiCo, is facing opposition from Hindu nationalists determined to keep multinationals out of the food service sector.

PepsiCo faced the wrath of a right-wing political group when it opened its first KFC outlet in the southern city of Bangalore early this year and then set up shop in New Delhi. Both units were sued on charges of using banned chemicals, but were subsequently acquitted.

Three months ago, Pepsi Foods Ltd., the Indian subsidiary of PepsiCo, began selling bhujiya in New Delhi in seven-ounce aluminum foil pouches under the brand name Lehar.

The Lehar bag costs 45 cents while the local brands sell for 29 to 35 cents. But the response to Lehar snacks has been good, said PepsiCo spokesman Deepak Jolly.

PepsiCo does not make the snack. Instead, it contracted with Bikaner Foods Ltd. of New Delhi, and buys four tons of the snack every day, according to Kishan Kumar, one of the owners. Bikaner Food’s holding company markets its own brands, which have a near monopoly in New Delhi, he said.

The small shops of Bikaner town fear that Pepsi will gobble them up eventually. The worried owners besieged the state chief minister Bhairon Singh Shekhawat when he visited Bikaner on Monday. They now plan to take their protest to New Delhi.

PepsiCo is convinced that it will win over Indian consumers.

``We offer a superior product that tastes the same every time. It stays fresh even after 15 days. You can’t say that of the others,″ Jolly said in an interview.

Some consumers, such as Sridevi Rajan, disagree. ``We don’t need fancy packaging and fancy prices for such a simple product. And all I worry is that this bhujiya should last 15 minutes,″ she said, digging into a packet at a local shop.

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