Professional Documents
Culture Documents
in India 1
BUSA 460
09/29/2008
Coke and Pepsi Learn to Compete in India: Case Analysis 1
joint venture with two local partners, Voltas and Punjab Agro, forming
“Pepsi Foods Ltd.” Coca-Cola followed suit in 1990 with a joint venture
in 1993 and then ultimately aligning with Parle, the leader in the
here does not always work there.” (Cateora & Graham, 2008, p. 604).
In this article, I will analyze the primary obstacle to Pepsi and Coca-
Cola’s success, discuss their strategies to cope with the issue, and
history, both Pepsi and Coca-Cola received alien status upon entry to
exceed 25% of total sales. Also, foreign businesses were not allowed to
market their products under the same name if selling within the Indian
market. (E.g. Lehar Pepsi) Most controversial was the agreement Coca-
Cola was forced to sign to sell 49% of its equity in order to buy out
investment rules in India were clear and unchanging, but this was not
the case during the 1990’s.” (Cateora & Graham, 2008, p. 608).
corruption.
make them affordable and easy to get access to. Pepsi introduced
product lines that were already available, such as cola, fruit drinks, and
carbonated water. Then, when the market was “ready”, they launched
festival. Pepsi gave away a kilo of Basmati rice with every refill of a
Jacob Augustine Coke and Pepsi Learn to Compete
in India 4
BUSA 460
09/29/2008
case of Pepsi. This is an effective strategy to blend the old (rice) with
resort in India.
A” (18-24 year old urban youth) and “India B” (rural youth). They used
placed in large cities all around India. More were added as demand
grew, along with new product lines. In Coca-Cola’s case, the JV with
Parle provided access to its bottling plants and its products. By forming
partnerships, both Coca-Cola and Pepsi were able to get initial access
demand may have been the most overlooked aspect by Coca-Cola and
Jacob Augustine Coke and Pepsi Learn to Compete
in India 5
BUSA 460
09/29/2008
Pepsi. India has not ever been considered a lucrative market for the
soft drink industry. In 1989, Indians per capita were consuming only
three bottles per year. One might question the risk-reward analysis
higher volume. Both met trends in demand with new product lines.
Suggestions
Gulf War in 2003, the following methods could have been implemented
education of its products. What are the benefits? Why is bottled water
market still hasn’t taken off so they need to penetrate harder. In 2003,
India’s annual consumption rate was still a meager seven per person.
etc…
year. To avoid having to sell its 49% stake though, Coca-Cola should
beverage market after Pepsi. By the time Coca-Cola was fully owned in
its own commitment? They went into this with their eyes open.”
for extensions and attempting to deny voting rights for the Indian
stake, Coca-Cola was only tarnishing its public image and destroying
government is crucial.
created the advisory board to regain the public’s credibility only after
residue. The bad press spiraled into more bad press after the activist
group in California got involved. This could have been prevented with
health scare after 1988 when it was discovered that BVO, an essential
the Indian market provides key lessons for future managers looking to
invest overseas. While many events are external and thus out of the
Jacob Augustine Coke and Pepsi Learn to Compete
in India 8
BUSA 460
09/29/2008
manager’s controls, there are many active approaches we can take to
research the market and trends ahead of time. And we should be fully
References
Cateora, Philip R., and John Graham. International Marketing. 13th ed.