More than a year back I pointed to a news story and wrote a blog post on Kishore Biyani being Sam Walton of India. This appears to be so true. IndiaRetailBiz is reporting on how Pepsi’s ‘Lay’ has lost out to ITC’s ‘Bingo’ in Future ‘Bazaar’ chains. Future Group is owned by Biyani.

Wal-Mart is known to place extraordinary pricing demands on its partners. The same thing is being seen in India now. Kishore Biyani owned retail stores have stopped stocking PepsiCo owned Frito Lay’s wafers and other snack products, on account of margin disputes and have replaced it with their own product line and ITC's Bingo snack products.

As reported earlier, the problem appears to have arisen on account of regular discount offers on Lay products given by the retailer, which was not taken kindly by small kirana merchants, who account for bulk of brand’s revenues. Frito Lay is also said to be not inclined to increase the margins of the Future group, to compensate for discounts given on their products.

Bingo, according to knowledgeable sources, has become the brand of choice as PepsiCo is believed to have asked for a reduction of 5% in margin from 25% to 20%.

In order to garner a decent share of the wafers market, which is dominated by the MNC brand, apart from a high voltage advertising campaign, ITC is offering about 5% higher margin than Frito Lay.

Future Group with it's large presence throughout India can use some muscle with bigger companies like PepsiCo to pass pass cheaper prices onto customers while taking good margins by itself.