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THE HISTORY OF PARLE (makers of Limca, Gold spot, Thumps Up)

The story of Thums Up & Gold Spot dates back to the late 1940s when Parle was
riding high on the success of its glucose biscuits under the popular brand Parle
Gluco. In fact, such was the popularity of the brand that it had a huge office in
Mumbai for the Gluco brand alone, and used to spend aggressively marketing it. In
1949, Parle decided to venture into the cola market by capitalizing on the already
popular Gluco brand and hence launched a cola drink called Gluco Cola. The
brand was destined to take off but had hit a hurdle within few weeks of its launch by
the global giant, Coca Cola.
Although Coca Cola did not have its presence in India that time, it had registered its
trademark in India and hence took offence when it found a similar sounding brand
which it thought would confuse Indians, thereby fearing its brand dilution and
threatened to go to court. Parle did not want to spend a fortune on legal battle and
quickly renamed it to Parle Cola, but Coca Cola was still not convinced. Parle did
not want to budge either, but after 2 years of putting up a brave fight, Parle
succumbed to pressure and discontinued Parle Cola in 1951.
But Parle was not the one to give up its ambitions so easily. In 1952, Parle launched
an orange-flavored cola called Gold Spot (named after its popular variety of
peppermint called Parle Gold Star). Gold Spot became an instant hit because it
tasted good even when it was slightly chilled (Vendors would carry them in large
utensils filled with ice to chill the bottles and sell them at busy intersections, beaches
& tourist spots). It was popular especially among children who loved the orange taste
with a fizz.
For the next few years, Parle, led by Ramesh Chauhan, put efforts into the beverage
business to expand its presence across India by setting up more bottling units &
franchise network for Gold Spot. By 1970, Parle had a pan-India presence through
its wide bottling plant network for Gold Spot and the time was right to introduce
another beverage to capitalize on this investment. With an orange drink already in its
portfolio, the next obvious choice was a lemon drink. In order to differentiate itself
from the lemon drinks of their competitors, Parle used special techniques to produce
a drink with a cloudy look and called it Limca, derived from the phrase Limbu Ka
(which in Hindi means of lemon). It was initially mocked by consumers who called it
soap water, but soon got hooked to the taste. The Limca brand, launched in 1971,
was targeted the upwardly mobile and especially ladies who wanted a fizzy, non-cola
alternative to quench thirst while on the move. By the Mid 1970s, Gold Spot & Limca
had established themselves as strong brands in metros & major cities across India,
but there was still scope for expansion. In the meantime, Coca Cola was also gaining
strength in India through aggressive marketing and partnership with bottling units.
The battle between Coca Cola & Parle was getting fierce by the day, and both the
companies were spending aggressively to promote their respective brands.

Coca Cola, being the foreign brand, obviously had an edge, especially among young
Indians who were obsessed with foreign brands, but Parle did not want to be left
behind and had to use some innovative marketing strategies & product placements
to counter Coca Cola & create a niche segment for itself to sustain.
Although Parle had established Gold Spot & Limca as successful brands, it never
allowed the success go to its head. Parle knew that it would not be wise to take on a
giant like Coca Cola head-on (by introducing a cola beverage) and hence chose not
to introduce any cola drink and limited its scope within the market for orange &
lemon drink. While Limca was already placed as a drink for the upwardly mobile
(especially ladies), Gold Spot had become a childrens drink. Coca Cola had begun
to capture the youth market (ages ranging from 18 to 30) which had lot of potential,
but Parle still did not have any brand targeted towards them and was eager to tap
that segment.
While Parle was growing leap and bounds, and customers were spoilt with choices
(Coca Cola, Gold Spot, Limca etc), the situation at the political front was shaky. In
1975, Emergency and for the next 2 years, fear among people was at an all time
high, due to the emergency excesses by President Sanjay Gandhi. This had taken a
toll on the soft drink market since outings, joyrides, trips & vacations had taken a
backseat. While MNCs like Coca Cola could withstand such slowdown (due to
enormous financial backing from its parent company), Indian companies like Parle
(with Gold Spot & Limca brands) which had spent considerably on bottling facilities &
their recent expenditure on expansion plans, suddenly found it difficult to sustain. By
1976-77, Parle was mulling over scaling down operations and limiting itself to
metros.
While Coca Cola was being hammered by Parle in the marketing front, its real hurdle
was in the politics of business. In a bid to check foreign exchange, the Government
of India, under Indira Gandhi, had passed a legislation which required foreign
companies to reduce their stake in their respective Indian subsidiaries to just 40%. It
was called the Foreign Exchange Regulation Act (FERA) passed in 1973 as an Act,
effective from 1974 under the purview of Reserve Bank of India which notified all the
foreign companies (including IBM & Coca Cola) to reduce their stake to 40% and
gave them 2 years time to implement the same.
Throughout 1975 & 1976, Coca Cola used its political connections (Indira Gandhi
Government) to negotiate (or to put on hold) with the Government over FERA and
other hurdles related to foreign exchange. By the Mid 1970s, Coca Cola had
aggressively ramped up operations across India and thanks to the profit margins, the
company earned considerably, which did not go down with nationalists who claimed
that the company was literally looting the nation and hence called for a nation-wide
Swadeshi movement led by George Fernandes, with Coca Cola being their main
target. Nationwide processions were organized against Coca Cola and several

crates of the soft drink were spilled into gutters as a mark of protest. George
Fernendes, being the Union Minister for Industries, raked up the FERA case and
demanded that Coca Cola must quickly reduce its stake in its Indian subsidiary to
just 40% as per the Act. Since Coca Cola did not have any high level political
connections with this Government, it agreed to swallow the bitter pill, but Fernandes
was still not convinced. He had made up his mind to drive out the MNC and as the
last resort, tried to hit Coca Cola where it would hurt the most.
Throughout the world, for several decades, it was (and still is) widely acknowledged
that Coca Cola has always been highly secretive about its recipe (formula of the
concentrate used in the soft drink) and would never reveal it even at gun-point.
George Fernandes knew this very well and he could vouch for the fact that Coca
Cola would do anything to remain in India but would not reveal its secret formula.
Hence, Fernandes picked up the 7 year old Act called Indian Patents Act 1970
passed by Indira Gandhi Government, and tried to evaluate if that could be used
against Coca Cola. Fernandes happiness knew no bounds when he found that 2 of
the points in the Indian Patents Act 1970 could be used against Coca Cola to force
them reveal their secret formula.
By Aug 1977, the Janata Party Government had pointed 2 guns at Coca Cola: Dilute
their stake in the company and reveal the secret formula, otherwise, quit India.
Although the Government had given 1 year time to Coca Cola to reconsider its case
or quit, the company left no time in winding up its operations, and within the next 1
month, had already shut down most of the factories. This had come as a major blow
for not just the company but even its workers who became jobless. Talking about the
soft drink industry, apart from Coca Cola, the only other major player with a pan-India
presence was Parle, which had an orange (Gold Spot) and cloudy lemon (Limca)
drink, but no cola drink, hence, leaving a huge void for the cola segment. Customers
were unhappy because there was no cola drink and 150,000 Coca Cola workers
were unhappy because they were jobless.
While taking on Coca Cola at the political front (by raking up FERA & Indian Patents
1970 Act), The Union Minister for Industries, George Fernandes was secretly
working on a plan to fill the void for Cola market, and provide jobs to the thousands
of Coca Cola workers. His plan was to market a Swadeshi cola drink to replace
Coca Cola, and he was in search of an Indian scientific lab which could develop the
formula. Hence, it was logical for George Fernandes to approach CFTRI for this
high-priority project. A high-profile team involving some of the top scientists was
setup at CFTRI and over the next few weeks, the lab developed a cola alternative
based on the following guidelines:
1. It must taste like Coca Cola
2. It must have minimal impact on health (i.e less caffeine)

It was tricky because reducing caffeine would deviate it from the Coca Cola taste,
but the team at CFTRI managed to come up with the best compromise which tasted
close to Coca Cola and had relatively lesser caffeine. The Government was satisfied
with the result and the next challenge was to give it an appropriate name. A contest
was held and after several weeks of scrutiny & intense brain storming sessions, the
name 77 or Double Seven was chosen to signify the eventful year which
according to the Janata Party witnessed happy moments like the ouster of Coca
Cola & launch of Swadeshi Cola. The Government went on overdrive mode and
soon launched a tingling lemon flavoured drink under the same brand name.
Although the marketing was aggressive, public response was not up to the mark
because those who were accustomed to Coca Cola (and it was this customer base
which Double Seven was trying to target) found it no match to Coke. The general
feedback was that although Double Seven tasted like Coca Cola, it was not as fizzy
as Coca Cola and lacked that magical/zing taste.
In the meantime, after quitting India, Coca Cola started concentrating on Pakistan
and to recover losses (due to lack of Indian market), the company started expanding
aggressively in Pakistan. There were even instances where Coca Cola helped
middle-men to smuggle Coke from Pakistan to India, to satisfy its loyal customers
who were craving for the drink and were ready to pay thrice the price. Hence,
within few months, the fizz out of Double Seven had diminished and the crave for
Coca Cola could not be fulfilled by the Government.
While rest of the franchises of Coca Cola were bombarding the market with their own
cola variants which were similar to Coca Cola taste (but most of them failed
miserably), Parle was still in observation mode because it had already burnt its
fingers few years ago with a cola brand called Gluco Cola. Parle already had more
than 50 franchises across India bottling their Gold Spot & Limca and it was just a
matter of incremental effort to introduce a cola drink which could in turn become a
pan-India cola drink. All that it had to do was to develop a concentrate formula and it
had to be right in the first attempt of the launch. Hence, it was logical for Parle to
remain alert, observe the market and then channelize its entire efforts on the
formula.
Ramesh Chauhan, leading the Parle soft drink company and the brain behind Gold
Spot & Limca brand, dedicated himself for this challenging task from the scratch.
One of the most expensive ingredients in cola drink back in the 1970s was the Kola
nut extract. Apart from the cost factor, the other challenge it imposed was that it had
to be imported from Africa. Back in those days, importing anything would be a
herculean task due to the foreign exchange problem, and moreover, would add up to
unnecessary delays, affecting production & logistics. Hence, Ramesh Chauhan
insisted upon using an alternative like tea extract which was readily available in India

but it was a risky proposition which the team took up as a challenge. However, after
the production of the drink, Ramesh Chauhan named it Thumbs Up. Just after
registering the brand name; the drink penetrated heavily into Indian market. Also the
likes of Campa Cola came into the market just to seize the cola market left by coca
cola.
In the late 1980s, Pepsi wanted to enter India. During the debates over Pepsis
proposals in Parliament, Ramesh Chauhan used his influence to lobby against
Pepsis entry in India by pointing out that India already had a thriving soft drink
industry and it was not necessary to invite a global cola brand. He did not succeed
as Pepsi entered India in 1990 and started a unique product branding. Such
branding efforts helped Pepsi gain market share. Due to lack of interest and
marketing efforts, Campa Cola started losing market share and scaled down
operations. Unable to face such intense competition, several local cola companies
died a natural death. Some of them were acquired by Pepsi and some of the
franchises of Parle switched their allegiance to Pepsi.
Although Parle was the main rival in the early 90s, Pepsis plan was to establish itself
before any other MNC (like Coca Cola) could enter India. Hence, Pepsi left no stone
unturned in its effort to reach out to the masses and one such medium in India was
Cricket. Pepsi realized this pretty quickly and jumped into the bandwagon by
sponsoring tournaments and identifying promising young players like Sachin
Tendulkar & Vinod Kambli to advertise its brand. By 1992-93, Pepsi had established
firmly in India as an aspirational brand for the youth, and in some ways, it had
become the face of liberal India, which had just opened up the economy to
accommodate a slew of global companies among which Pepsi, despite being a
foreign brand, had become Indian due to its marketing efforts.
All this while; Coca Cola had been on the look-out for an opportunity to re-enter
India. In Oct 1991, while the economic reforms were still in progress, Coca Cola took
the bait and entered into a partnership with Britannia (the biscuit company) to launch
Coca Cola in India. In early 1992, when Dr Manmohan Singh lifted the restriction of
40% cap for equity by foreign company, Coca Cola pounced immediately and
declared its intention of returning to India. In June 1993, Coca Cola acquired a
bottling plant near Agra and painted the town red. Billboards with taglines like Happy
to be here had dominated the streets of Delhi & Agra by September 1993.
Already under tremendous pressure due to competition from Pepsi, Ramesh
Chauhan felt cornered when Coca Cola announced its arrival but he still tried to put
on a brave face. While on one hand, there were rumours of Parle selling out to Coca
Cola or partnering with Pepsi, on the other hand, there were speculations about
Ramesh Chauhan launching a new cola brand altogether to take on both the
American cola giants.

In order to get a foothold in India, Coca Cola had 3 options:


1. Gradually expand operations by building its own plants throughout India. This
process would take several years.
2. Poach bottlers (franchises) of other cola brands by offering them irresistible
benefits.
3. Acquire a company which already has all the facilities in place, so that Coca
Cola can reach out to every nook and corner of India from day one.
Coca
Cola
started
with
the
2nd
option
i.e
Poaching
bottlers.
Although Parle was the market leader with more than 80% of the market-share
catered by 62 bottlers across India; it was a fragile business model because Parle
owned only 4 bottlers while the rest (58 bottlers) were owned by franchises. Most of
these franchises were not happy with Ramesh Chauhans autocratic leadership style
and they preferred to work for foreign brands like Coke. Hence, it was very easy for
Coca Cola to hunt down the top bottlers and poach them. Ramesh Chauhan was
helpless because almost every week, there would be news of one more bottler
switching to Coca Cola. If this continued, then Parle would end up with less than 10
bottlers (since 4 were its own and few were still very loyal to it), thereby losing
significant market share and dying a natural death.
By September 1993, Ramesh Chauhan realized that there was no point fighting with
the giant which was on a poaching spree and decided to surrender. It was a very
tough decision to make because these brands (Thums Up, Limca, Gold Spot) were
carefully nurtured by Chauhan like his own children and now he had to sell them off!!
With a heavy heart, he bid goodbye to his brands and sold them to Coca Cola.
During the signing of the contract, Ramesh Chauhan turned emotional & cried
incessantly. Although the details of the deal were confidential, it was speculated that
it was a $60 million deal
It was double-bonanza for coca cola because firstly, it managed
to instantaneously reach out to every part of India, and secondly, there was no
significant competition (because the leader itself was acquired). On 24th October
1993, Coca Cola launched its drink with a bang symbolically in front of the Taj Mahal,
Agra and distributed millions of coke bottles all over India for free.
Soon after buying Parle brands, in spite of instantly getting 80% market-share and
the bottling network without much effort, Coca Cola found itself in a tricky situation
due to conflict of brands as follows:
1) Thums Up & Coke were cola drinks

2) Gold Spot & Fanta were orange drinks


3) Limca, Citra & Sprite were lemon drinks
Throughout the world, Coca Cola always channelized its marketing efforts on its own
global brands and hence in India also they wanted to use similar approach by getting
rid of redundant brands. Ramesh Chauhan tried very hard explaining them that the
Indian market was wide, diversified & large enough to accommodate multiple brands
in same segment, but Coca Cola did not heed to his advice. Gold Spot was
ruthlessly killed on very first day itself, to make way for Fanta as the masti drink.
Limca was slowly dismantled in few months and next in line was Thums Up.
Although the CEO of Coca Cola India tried to explain the American HQ that Indian
were addicted to Thums Up and killing it would be like shooting itself in the foot, the
American boss remained adamant and insisted on shelving it, which was faithfully
obliged by the Indian subsidiary. Coca Cola finally realized that by killing Thums Up,
it was literally serving significant market share to Pepsi on a platter. Before it was too
late, Coca Cola revived Thums Up and in 1997, the legendary drink returned with a
thunder.
By the late 1990s, Thums Up regained its crown as the top cola brand in India and
there was no stopping. The Thums Up brand just refused to die. However, the same
was not the case with Gold Spot, Limca & Citra which were mercilessly killed and
there were still no signs of revival. These Parle brands also faced same fate in the
Parle franchised company outside India like the one in Nigeria.
As for Parle in Nigeria; it does not really have much history after its entrance into the
Nigerian market using the same marketing techniques is uses in India. It actually
gained a large market share in Nigeria and created good competition for Coca Cola
and Pepsi as the brand were generally loved by Nigerian soft drink consumers.
Though the management and leadership of the company was based in India; The
Nigerian bottlers were able to use different advertisement media to position the
brands on the mind of the consumers. The takeover by Coca Cola has led to the
death of their Nigerian branch as their brands in Nigerian faced the same fate as
their counterparts in India.