The project is about the 2 leading soft drinks brands, Coca Cola and Pepsi and their journey in the Indian market.
It also shows the problems and controversies in regard to these companies that arose between 2003 to 2006 and the other leading brands in the Indian beverage market.
2. CONTENTS
1 Acknowledgement and Preface
2 Introduction
3 CoCa-Cola and Pepsi Co.
4 Entry and Exit of Coca Cola in India
5 Campa Cola and Thumps Up come in existence
6 Entry of Pepsi
7 Re entry of Coca-Cola
8 Pepsi and Coke – Pesticide Controversy
9 Result
10 Leading brands in Indian Market
11 Bibliography
3. INTRODUCTION
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 population 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 drinks.
The so-called competition for 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.
4. COCA – COLA
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
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, PepsiCo is one 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. PepsiCo is a
world leader in snacks, foods and beverages with revenues of more than $43
billion. It consists of many companies amongst which the prominent once are
Pepsi-Cola, Frito-Lay and Pepsi Food International. The group is presently into
two of the most profitable and growing industries namely, beverages and snack
foods. It has scores of big brands available in nearly 150 countries across the
globe.
5. ENTRY AND EXIT IN INDIA – COCACOLA
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.
6. CAMPA COLA AND THUMPS UP COMES IN EXISTENCE
After Coca Cola left the Indian 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’.
Thums 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 Thums Up as their flagship drink, adding to their
portfolio of older brands Limca (lime flavour) and Gold Spot (orange flavour).
Thums 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 Thums Up market share kept increasing since 1983
(43%) to 1990 (70%), while its chief rivals share had been declining.
7. ENTRY OF PEPSI
Pepsico saw the opportunity to enter the Indian market after Coca- Cola
departed.
In their first attempt in 1985, Pepsico 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 Pepsico 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 investments in food and agro processing, bring advanced technology and
50% of total produce to be exported.
PepsiCo gained entry to India in 1988 by creating a joint venture with the Punjab
government-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India
Limited. This joint venture marketed and sold Lehar Pepsi until 1991, when the
use of foreign brands was allowed; PepsiCo bought out its partners and ended the
joint venture in 1994.
8. RE ENRTY OF COCA COLA
The Coca-Cola Company re-entered India through its wholly owned subsidiary,
Coca-Cola India Private Limited and re-launched Coca-Cola in 1993 after the
opening up of the Indian 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 per cent 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, Goldspot, 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.
9. PEPSI AND COKE-PESTICIDE CONTROVERSY-2003 - 2006
The 2 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.
On August 5, 2003, The Centre for Science and the Environment (CSE) issued a
news release which stated that “The soft drinks brands sold contain a deadly
cocktail of pesticides residue.” The CSE, a New Delhi based research and advocacy
group that aims for sustainable growth, based its accusations on tests conducted
by the Pollution Monitoring Laboratory in April, 2003. During the tests, pesticide
residue was 24 times above limits set by the Bureau of Indian Standards in 57
samples tested. In one bottle of Coca-Cola bought in Calcutta, the level of the
carcinogenic pesticide Lindane exceeded the bureau’s standards by 140 times.
The pesticides – Lindane, DDT, Malathion and chlorpyrifos are responsible for
cancer, damage to the nervous system and reproductive system, birth defects,
and severe disruption of immune system. Coca Cola India president and CEO
Sanjiv Gupta argued against the allegations of CSE and questioned their testing
method. This dispute had stoked a fresh media maelstrom and had fanned
protests across several regions.
10. 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 of 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 pesticide levels in their products are below permissible levels and less than
those detected in other foods, such as tea, fruits and dairy products.
11.
12. RESULT
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 & 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.
2 years later, Coca Cola hiked prices in India by 10-15 percent. 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.
13. LEADING BRAND IN INDIAN SOFT DRINKS MARKET
GOLD SPOT: This orange colored carbonated soft drink was introduced in the
early 1950s, and acquired by the Coca-Cola company in 1993. Its tangy taste has
been popular with Indian teenagers.
LIMCA: This thirst-quenching beverage features a fresh and light lemon-lime
taste. The Limca brand was introduced in 1971 and acquired by the Coca-Cola
company in 1993.
MAAZA: Maaza, launched in 1984 and acquired by the coca-cola company in
1993, is a non carbonated mango soft drink with a rich, juice & natural mango
taste.
THUMPS UP: In 1993, the Coca-Cola company acquired this brand, which was
originally introduced in 1977. Its strong and fizzy taste makes it unique
carbonated Indian cola. As of February 2012, Thums Up is the leader in the cola
segment in India, commanding approximately 42% market share and an overall
15% market share in the Indian aerated waters market.
APPY FIZZ – It is a product by Parle Agro, introduced in India in 2005. Appy
Fizz consists of carbonated apple juice, and is used as the basis for cocktails and is
a popular drink. After the success of Appy which was clean apple juice, Parle
launched its sequel product as Grappo Fizz, which is a carbonated grape juice.
RASNA - Rasna is a soft drink concentrate brand owned by Pioma
Industries which is based in Ahmedabad, India. It was launched in mid-seventies
but started gaining popularity in the eighties when the market was dominated
by carbonated soft drinks like Thums up, Gold Spot and Limca. As of 2009, Rasna
had a 93% market share in the soft drink concentrate market in India.
14.
15. According to 2012 reports, Sprite has a market share of 14 per cent while Thums
Up has a 15 per cent share. Following the two Coca Cola brands, Sprite and Thums
Up, is Pepsi, which has a 11.2 per cent market share. Sprite is also the largest
selling sparkling (carbonated) soft drink brand in China as well, according to news
reports.
Brand Coke itself follows Pepsi with a 7.5 per cent share. Several other brands
such as Fanta and Mirinda with a similar share of the market as Coke jostle for the
fourth place in terms of share.
Sprite, launched its new summer campaign with a tagline of ‘chalo apni chaal’ in
summer 2012. It continued with its campaign which targets the Indian youth.
16. CONCLUSION
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 environments 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 lifestyles 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.
