You are on page 1of 10


In the modern urban culture consumption of soft drinks particularly among

younger generation has become very popular. Soft drinks in various flavors and tastes are

widely patronized by urban populations at various occasions like dinner parties, marriages,

social get together, birthday celebration etc. Children of all ages are especially attracted by

the mere mention of the word soft drink.

The so-called competition of this product in the market is different from other products.

Mass media, particularly television, has contributed to a large extent to the ever growing

demand for soft drinks. The attractive jingles and sports make the large audience

remember the brand at all times.

In today’s highly competitive market place, two players have dominated the industry; The

New York based Pepsi Company Inc. and the Atlanta based Coca-Cola.

Throughout the globe, these major players have been battling it out for a bigger chunk of

the ever-growing soft drink market. This battle has been witnessed in India too, between

these two giants.



Meaning of business environment 1

About Coca-Cola and Pepsi 2

Entry and exit of Coca-Cola 3

Campa Cola and Thumps Up came to existence 3-4

Entry of Pepsi 4

Re entry of Coca-Cola 5

Pepsi and Coca-Cola pesticide controversy (2003 to 5-6

Result 6

Conclusion 7

Reference 7


The sum total of all the factors influencing the business is called business

environment. A business is run not in a vacuum bit in a society. While doing business it

has to come in contact with various social factors. These factors are- customers, suppliers,

competitors, government policies, political structure, constitutional laws, etc. All these

factors are outside the business and business has no control over them. They are called

external factors influencing business. It has both of threats and opportunities for the

business. The study of business environment enables the managers to identify treats and

opportunities. An organization can benefit itself by continuously scanning the

opportunities and can forestall the possible threats.

For example, if the customers in large numbers stop buying the product of a

particular company, the sales will come down and its profits will decline. The example of

Coca-Cola and Pepsi is there for you to see.


 First mover advantage

 Warning signal

 Taping useful resources

 Coping with rapid changes

 Assisting in planning and policy formulation

 Improvement in performance




It was invented in May, 1886 by Dr. John S. Pemberton in Atlanta, Georgia,

United States of America. Coca-Cola offers a portfolio of world class quality sparkling

and still beverages, starting from Coca-Cola to over 400 soft drinks, juices, teas, water and

energy drinks. The most successful brands are Coca Cola, Diet coke, Sprite and Fanta.

With operations over 200 countries it has a workforce of 55,000 employees and serves

over 1.7 billion servings each day.


Pepsi was first developed by Caleb Bradham, a pharmacist and industrialist from

New Bern, North Carolina, in 1898. As the cola progressed in popularity, he created the

Pepsi-Cola Company in 1902 and registered a patent for his recipe in 1903. The Pepsi-

Cola Company was first incorporated in the state of Delaware in 1919. Currently, Pepsi

Co. is one of the largest companies in the U.S. It figures amongst the largest 15

companies worldwide according to the number of employees hired. It has a U.S. Fortune

rank of 50. Pepsi is bottled in nearly 190 countries. Pepsi Co is a world leader in snacks,

foods and beverages with revenue of more than $43 billion. It consists of many companies

amongst which the prominent once are Pepsi-Cola, Frito-Lay and Pepsi Food

International. It has scores of big brands available in nearly 150 countries across the globe.


Coca Cola entered India in 1967. In 1977, the Janata government led by Moraji

Desai came to power and launched the Sixth five- Year Plan, which aimed to boost the

agricultural production and rural industries. Seeking to promote economic self- reliance

and indigenous industries, the government wanted multi- national corporations to go into

partnership with Indian corporations. At that time Coca-Cola was India’s leading soft

drink when the new government ordered the company to dilute at least 60% of its stake in

its Indian unit as required by the Foreign Exchange Regulation Act (FERA) OF 1973 and

also turn over its secret formula for Coca-Cola. The policy proved controversial,

diminishing foreign investment and led to the exit of high-profile corporations such as

Coca-Cola and IBM from India.


After Coca Cola left the India market due to problems with Indian Government,

the Indian Government decided to start a local brand to meet the demand for soft drinks in

the country. Pure drinks group was started by Padma Sri late Sardar Mohan Singh in 1942,

and in 1950 they started bottling Coca-Cola across India. In 1978, when Coca-Cola left

India, they started bottling their own brand ‘Campa Cola’.

‘Thumps Up’ was introduced in 1977 to offset the expulsion of the Coca-Cola

Company from India. The Parle brothers, Ramesh Chauhan and Prakash Chauhan, along

with Bhanu Vakil, launched Thumps Up as their flagship drink, adding to their portfolio of

older brands Limca (lime flavor) and Gold Spot (orange flavor).

Thumps Up enjoyed a near monopoly with a much stronger market share, often

overshadowing domestic rivals like Campa Cola, Double Seven, Dukes and United

Breweries Group’s McDowell’s Crush.

According to statistics Parle’s Thumps Up market share kept increasing since 1983 (43%)

to 1990 (70%), while its chief rivals share had been declining.


Pepsi Co saw the opportunity to enter the India market after Coca-Cola departed.

In their first attempt in 1985, Pepsi Co tried to join hands with one of India’s leading

business house, the R P Goenka group, to begin operations in the country. They put

forward a deal to promote the development and export of Indian agro-based products, and

in turn get permission from central government to import cola concentrate and to sell a

Pepsi Co brand. This request was rejected on the grounds that the import of concentrate

could not be agreed to and the use of foreign names were not allowed. In their second

attempt in 1988, PepsiCo put forward a very impressive offer. They promised to create

employment opportunities for about 50,000, make 75% of the total; investment in food

and agro processing, bring advanced technology and 50% of total produced to be exported.

Pepsi Co gained entry to India in 1988 by creating a joint venture with the Punjab

government-owned Punjab Agro Industrial Corporations (PAIC) and Voltas India Limited.

This joint venture marketed and sold Lehar Pepsi until 1991, when the use of foreign

brands was allowed, Pepsi Co brought out its partners and ended the joint venture in 1994.


The Coca-Cola Company re-entered India through wholly owned subsidiary, Coca-

Cola India Private Limited and re-launched Coca-Cola India Private Limited and re-

launched Coca-Cola in 1993 after the opening up of the India economy to foreign

investments in 1991. However, Coke’s reentry was based upon several commitments and

stipulations which the company agreed to implement in due course. One such major

commitment was that Hindustan Coca-Cola Holdings would divest 49% of its

shareholding in favor of resident shareholders by June, 2002. As the company had

returned to India after a gap of 16 years, many local brands had emerged till then. It

acquired ownership in the Parle Group which gave the company instant ownership to the

popular brands likes Thumps Up, Gold Spot, Limca and Mazza. The deal not only gave

manufacturing, bottling, and distribution assets to Coke but also a strong consumer

preference. Jayadev Raja was made the first Chief Executing Officer of Coca-Cola India.

Access to 53 of Parle’s plants and a well set bottling network, gave Coca-Cola Company

an excellent base for rapid introduction of the company’s international brands.


The two international brands Pepsi and Coca-Cola faced a new challenge when the

local governments placed a ban on their products following a report by an environmental

group claiming the sodas contained high levels of pesticide. The state of Gujarat and

Madhya Pradesh , had banned the sale of the soft drinks in schools and government

offices. Similar bans were announced by state governments in the northern states like

Rajasthan and Punjab. A week before lawmakers from the opposition Bharatiya Janata

Party called for a nationwide


Ban, Protesters in Mumbai and Kolkata defaced Pepsi and Coke ads and burned placards

depicting soda bottles. Public had gone furious and protest for Coke and Pepsi to leave

India had begun. Soon, sales dropped by 30%-40%. Both Coke and Pepsi published

newspaper advertisements to spread message that pesticides levels in their products are

below permissible level and less than those detected in other foods, such as tes, fruits and

dairy products.


Repeated tests were conducted and on August 21, 2003, the then minister of Health

and Family Welfare, Sushma Swaraj announced that the samples did not contain unsafe

levels of pesticides. The Joint Parliamentary Committee (JPC) investigating pesticide

contamination in soft drinks and beverages tabled its final report in Parliament in 2004,

corroborating the findings of the centre for Science and Environment (CSE) that leading

Coca-Cola and Pepsi brands contained hazardous pesticides. The efforts of the

government of India have led to the establishment of stricter norms that are on par with the

best in the world. Two years later, Coca-Cola hiked prices in India by 10-15%. The reason

given was price increases to cover rising raw material and distribution costs and the

lingering effects of the pesticide allegations which drove decline in sales.


 Limca

 Maaza

 Thumps Up

 Appy Fizz

 Sprite

 Fanta


There are still a lot of issues that Coke and Pepsi need to resolve when it comes to

their image abroad and in India. They both still represent the west, but they need to

become better adapted to the different environment they decide to become part of. They

need to not just be able to market their product efficiently, they need to show some

responsibility when things start to go sour for them. The Indian people continue to steadily

buy and consume soft drinks. However, Indians in general are consuming a wider variety

of beverages and Coke and Pepsi should be willing to expand the options. They already

have some fruit sodas, and some bottled water markets, but potential for introducing fruit

cocktails and other beverages do exist in the market. Coke and Pepsi still continue to align

themselves with brands, celebrities, sports, and lifestyle that the Indians find appealing.

Both the companies need to continuously check on their products to make sure they are

safe, and continue to be environmentally and morally sound with their plants, operations,

distribution, and products in general.


 Business Studies And Management : 87-110

 Wikipidia

 White paper on business standards