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TEAM 8 Balachander Murugesh Praveen Vignesh Vimal

INDIAN BEVERAGE INDUSTRY
y Coca-Cola s past in India y Present from 1958 until 1977 y Industry Shakeup in 1988 y State of the Industry in 1993 y 45% of market consisted of small manufacturers y $3.2 million market share y Low Demand for Carbonated Drinks y Average of 3 bottles a year/person in 1989, 11 Bangladesh, 13 - Pakistan y Average of 1404 servings a year/person in U.S. in 2003

1. POLITICAL ENVIRONMENT IN INDIA y Key Issues y India seen as unfriendly to foreign investors for many years y The Principle of Indigenous Availability y Policy banning imports being sold in India New Industrial Policy Trade rules & regulations simplified Foreign investment increased y The Liberalization of India s Government in 1991 y y y y Pepsi and Coke entered in 1986 and 1993 respectively .

CONTD y Indian Laws y Unlawful to market under their Western name in India y y Pepsi became Lehar Pepsi Coca-Cola merged with Parle and became Coca-Cola India Coca-Cola agreed to sell off 49% of its stock as a condition of entering and buying out an Indian company Pepsi entered earlier. and was not subject to this y Different Laws for Pepsi and Coke y y .

CONTD y Problems y India forced Coke to sell 49% of its equity to Indian investors in 2002 y Coke asked for a second extension that would delay it until 2007 y India denied this y Pepsi was held to this since they entered India in a different year. .

the government was changing all time y Coke could have agreed to start new bottling plants instead buying Parle to escape from the Govt. agreement .CONTD y These problems could not been forecasted prior to the market entry because.

MARKET ENTRY y PEPSI (EARLY ENTRY y Advantages y 1986) y y y Entered the market Before Coca-Cola and was able to gain a foothold in the market while it was still developing Gained 26% market share by 1993 Government policies favored Joint venture with Voltas and Punjab Agro y Disadvantages y y y y Were forced to change their name to Lehar Pepsi Pepsi approached Parle which was failure Govt. limited their soft drink sales to less than 25% of total sales Struggled to fight off local competition .2.

Gold Spot and Mazaa Set up 2 new ventures with Parle to bottle and market product y Disadvantages y y y y Denied entry until 1993 because Pepsi was already there Rigid Rules and Regulations Harder to establish market share with Pepsi there Were not allowed to buy back 49% of equity . Citra.CONTD y COCA-COLA (LATE ENTRY 1993) y Advantages y y y Were able to buy 4 bottling plants from industry leader Parle Also bought Parle s leading brands: Thums Up. Limca.

RESPONSES PRODUCT POLICIES y PEPSI y y y y Formulated under the name Lehar Pepsi Marketing and distribution are focused in north west cities of India like Delhi Pepsi launched 7 UP in clear lemon category Introduced Aquafina and Fruit drinks y COCA COLA y y Joint venture with Britannia and entered as Britco Foods Introduced Kinley and fruit drinks .3.

PROMOTION POLICIES y PEPSI y Navratri Campaign y Tied up with Gujarat TV channels. Chennai Dreams y Both Use of different campaigns for different areas of India y India A campaigns try to appeal to young urbanites y India B campaigns try to appeal to rural areas . Zee alpha y Refill offers after purchasing 300 ml bottle and Basmati Rice scheme y TV campaigns y Sponsorships y COCA COLA y Events Thumps up Toofani Ramjhat y Buy one get one free y Free Goa Trip Lucky Draws y TV Campaings Bombay Dreams.

Prices slashed to Rs. 8 for 300 ml Bottle y Pepsi y Started out with an aggressive pricing policy to try to get immediate market share from Indian competitors y Forced to match the price reduction of Coke . 5 for 200 ml and Rs.PRICING POLICIES y Coca-Cola y Attempt to encourage consumption to try to compete with Pepsi and gain market share y Introduction of MINI y Cut its prices by 15-25% in 2003.

DISTRIBUTION ARRANGEMENTS y Production plants and bottling centers placed in large cities all around India y More added as demand grew and as new products were added .

GLOCALIZATION y Glocalization ? y Global + Localization = Glocalization y By taking a product global. . a firm will have more success if they adapt it specifically to the location and culture that they are trying to market it in.4.

Pepsi Foods Ltd. .CONTD PEPSI s GLOCALIZATION y Pepsi forms joint venture when first entering India with two local partners. y In 1990. y In keeping with local tastes. Voltas and Punjab Agro. changed the name of their product to Lehar Pepsi to conform with foreign collaboration rules. forming Pepsi Foods Ltd . Pepsi launched its Lehar 7UP in the clear lemon category.

. y Pepsi s most effective glocalization strategy has been sponsoring world famous Indian athletes. a traditional festival held in the town of Gujarat which lasts for nine days. such as cricket and soccer players.CONTD y Advertising is done during the cultural festival of Navrartri.

Coca-Cola issued free passes to the celebration in each of its Thums Up bottles Also ran special promotions where people could win free vacations to Goa. Formed a joint venture with the market leader Parle in 1993 For the festival of Navrartri. a resort state in western India Coca-Cola also hired several famous Bollywood actors to endorse their products .COKE s GLOCALIZATION y First joined forces with the local snack food producer y y y y Britannia Industries India Ltd. in the early 90 s.

y Coca-Cola India tries to expand investment y Government allowed acquisition only if Coca-Cola agreed to sell 49% of equity within 2 years y Coca-Cola tried to get extensions twice y India granted the first extension.5. COKE s MISTAKES Agreeing to their mistakes in planning and managing its return y Enters Market at the Wrong Time y By entering at this time. denied the second . Coca-Cola India agreed to abide by all the Foreign Investment Laws of that year.

CONTD y 1st Mistake y Coca-Cola should have been more careful of when they entered the market y 2nd Mistake y Coca-Cola should not have tried to weasel their way out of promises that they made. y These mistakes hurt Coca-Cola s image and reputation as an International Company .

y Then they can also put water recycling plant to treat the discharged water from their factories and then they can provide that water to farmers for their agricultural use.6. . WATER ISSUES AND ADDRESSING THE GROUP DIRECTLY y Pepsi and Coke can confront the issue of water use in the manufacturing of their products by the use of canal irrigation & rainwater harvesting. This way the groundwater problem can also be solved and managed.

They can also hire celebrities to do ads for their products because the public follows them.CONTD y Coke can further defuse boycotts or demonstrations against their products in California by doing adcampaigns in which they can ask the experts from the ministry of health to convey the message to the public that their products are safe and healthy. y Coke should address the Group directly .

PEPSI / COKE LONG RUN y Pepsi y Better marketing and advertising strategies y More widely accepted y More market share y Since Pepsi was the leader in the past it had gained the trust of the Indian consumers y Coke y Government conflicts y Trailing Pepsi in market share y Pepsi will fare better in the long run .7.

8.COKE y Pay specific attention to deals made with the government y Establish a good business relationship with the government y Investment in quality products y Advertising is crucial . LESSON s LEARNED PEPSI y Beneficial to keep with local tastes y Beneficial to pay attention to market trends y Celebrity appeal makes for exceptional advertising y It pays to keep up with emerging trends in the market LESSON s LEARNED .

GENERAL y What works outside not work necessarily in India y A company should be flexible enough to cope up with the changing Govt. policies and should maintain good relationships with government .