Coke N Pepsi
CASE 13 Coke and Pepsi Learn to Compete in India
THE BEVERAGE BATTLEFIELD
In 2007, the President and CEO of Coca-Cola asserted that Coke has had a rather rough run in India; but now it seems to be getting its positioning right. Similarly, PepsiCo’s Asia chief asserted that
India is the beverage battlefield for this decade and beyond.
Even though the government had opened its doors wide to foreign companies, the experience of the world’s two giant soft drinks companies in India during the 1990s and the beginning of the new millennium was not a happy one. Both companies experienced a range of unexpected problems and difficult situations that led them to recognize that competing in India requires special knowledge, skills, and local expertise. In many ways, Coke and Pepsi managers had to learn the hard way that “what works here” does not always “work there.” “The environment in India is challenging, but we’re learning how to crack it,” says an industry leader.
THE INDIAN SOFT DRINKS
INDUSTRY
In India, over 45 percent of the soft drinks industry in 1993 consisted of small manufacturers. Their combined business was worth
$3.2 million dollars. Leading producers included Parle Agro
(hereafter “Parle”), Pure Drinks, Modern Foods, and McDowells.
They offered carbonated orange and lemon-lime beverage drinks.
Coca-Cola Corporation (hereafter “Coca-Cola”) was only a distant memory to most Indians at that time. The company had been present in the Indian market from 1958 until its withdrawal in 1977 following a dispute with the government over its trade secrets. After decades in the market, Coca-Cola chose to leave India rather than cut its equity stake to 40 percent and hand over its secret formula for the syrup.
Following Coca-Cola’s departure, Parle became the market leader and established thriving export franchise businesses in
Dubai, Kuwait, Saudi Arabia, and Oman in the Gulf, along with
Sri Lanka. It set up production in Nepal and Bangladesh
THE BEVERAGE BATTLEFIELD
In 2007, the President and CEO of Coca-Cola asserted that Coke has had a rather rough run in India; but now it seems to be getting its positioning right. Similarly, PepsiCo’s Asia chief asserted that
India is the beverage battlefield for this decade and beyond.
Even though the government had opened its doors wide to foreign companies, the experience of the world’s two giant soft drinks companies in India during the 1990s and the beginning of the new millennium was not a happy one. Both companies experienced a range of unexpected problems and difficult situations that led them to recognize that competing in India requires special knowledge, skills, and local expertise. In many ways, Coke and Pepsi managers had to learn the hard way that “what works here” does not always “work there.” “The environment in India is challenging, but we’re learning how to crack it,” says an industry leader.
THE INDIAN SOFT DRINKS
INDUSTRY
In India, over 45 percent of the soft drinks industry in 1993 consisted of small manufacturers. Their combined business was worth
$3.2 million dollars. Leading producers included Parle Agro
(hereafter “Parle”), Pure Drinks, Modern Foods, and McDowells.
They offered carbonated orange and lemon-lime beverage drinks.
Coca-Cola Corporation (hereafter “Coca-Cola”) was only a distant memory to most Indians at that time. The company had been present in the Indian market from 1958 until its withdrawal in 1977 following a dispute with the government over its trade secrets. After decades in the market, Coca-Cola chose to leave India rather than cut its equity stake to 40 percent and hand over its secret formula for the syrup.
Following Coca-Cola’s departure, Parle became the market leader and established thriving export franchise businesses in
Dubai, Kuwait, Saudi Arabia, and Oman in the Gulf, along with
Sri Lanka. It set up production in Nepal and Bangladesh