prepared by final year engineering students in an elective course.

1. Pepsi’s entry into India
Executive Summary

2. DA-IICT
• INTERNATIONAL MANAGEMENT
KINJAL CHOUDHARY
SAURABH BARNWAL
DEVVRATH SHAMAL
SAURABH PASHINE
RAGHAV NEGI
AYUSH PARMAR

3. A letter to Pepsi from George
Fernandes
• “I learned that you are coming here. I am the
one that threw Coca-Cola out, and we are
soon going to come back into the government.
If you come into the country the same fate
awaits you as Coca-Cola.”
George Fernandes
(General Secretary Janta dal)

4. Political Environment During 80s
• India had closed economy and government
intervention in the corporate sector was quite
high.
• Use of foreign brand name not allowed as per
regulatory framework.

5. Need for Pepsi to reach India
• U.S.A the major market for PepsiCo reached
saturation and Pepsi needed to expand.
• India was a lucrative destination because of its
large middle class.
• Soft drink consumption of India was only
3bottles/annum compared to 63 for Egypt , 38
for Thailand and 13 for even neighboring
Pakistan. So it was highly untapped.

6. Pepsi’s Actions
• PepsiCo joined hands with R.P Goenka (RPG)
group to begin operations in the country.
• The company along with the R.P.G group
company Agro Product Export Ltd. Planned to
import the cola concentrate and sell soft
drinks under the Pepsi label.
• Import of cola concentrate would essentially
be in return for exporting juice concentrate
from operations to be established in the state
of Punjab.

7. Grounds For Rejection Of The Proposal
• PepsiCo’s entry into India revolved around
“promoting and developing the export of
Indian agro based products and introducing
and developing PepsiCo’s products in the
country ” .
• Still the government rejected the proposal
because of:---

8. Contd…
1. The Government did not accept the clause
regarding the import of cola concentrate .
2. The use of foreign brand name(Pepsi) was
not allowed as per the regulatory framework.
• Not willing to sit quietly on the issue Pepsi
framed another proposal.

9. Proposal-2
• Lot of emphasis on the PepsiCo’s entry on
agriculture and employment in Punjab.
• Promise that new proposal would tempt many
terrorists to return to society.
• PepsiCo even made few commitments to the
Indian government.

10. Commitments made by Pepsi
• The company would focus on food and agro-
processing and only 25% of the investments
would be directed towards soft drinks
business.
• The company would bring advanced food
processing technology and also give a boost to
image of the products made in india in foreign
markets.

11. Contd…
• Half of the production would be exported and
the export-import ratio would be 5:1 for a
period of 10 years (80% of the exports to be of
food products manufactured by the company
and 20% of the exports to be of food products
from a select list manufactured by other
companies)
• Creation of jobs for 50,000 people across the
nation of which 25,000 in Punjab alone.

12. Contd…
• Foreign brand names would not be used.
• An agricultural research center would be
established.
• Finally govt. agreed to the conditions as a
result Pepsi was a joint venture between
PepsiCo(36.89%),Voltas India ltd(24%) and
Punjab Agro Industrial Corporation(36.11%)

13. Pepsi’s way of handling Commitments
• Its cola was named “Lehar Pepsi” Pepsi was
given a prominent position while Lehar was in
background.
• Failed to export 50% of its production.
• Pepsi failed to create jobs by 1996, it had only
2,400 direct and 26,000 indirect employees.
• No concrete steps were taken to set up an
agro research institute.

14. July 1991 India Liberalizes
• Pepsi bought of its partners PAIC’s stake was
reduced to less than 1%.
• The government removed the restrictions that
bound Pepsi’s investment in soft drinks to only
25% and its need to export 50% of its
production.
• Pepsi changed its colas name from Lehar Pepsi
to Pepsi.

15. Critical Problems and Issues Faced By
PepsiCo

16. Critical Problems and Issues faced by
PepsiCo
• Closed economy of India during 80s.
• Use of foreign brand name not allowed as per
regulatory framework.
• Import of cola concentrate was not allowed.
• 100% foreign direct investment was not
allowed.
• Agricultural sector was the priority.

17. Strategies Adopted by PepsiCo

18. Strategy Adopted By PepsiCo
• Promoting and developing the export of Indian
Agro-based products, though it got rejected.
• Each cola import would be in return of exporting
juice concentrate from Punjab.
• Development and Welfare of State.
• Bringing about Agriculture Revolution in state.
• Creating Employments.
• Terrorists to return to society.
• Punjab boasted a healthy agricultural sector

19. Contd…
• Development of Areas it planned to operate in
• Directing major (75%) investment towards
agricultural sector
• Focusing on food and Agro-processing.
• Boosting the image of Indian products in foreign
market.
• Establishing Agricultural Research Centre.
• More emphasis on Exports than imports to
improvise the balance of payment.

20. Alternative Solution

21. Alternative Solution
• One of the alternative that Pepsi inc. could have
adopted is the “wait and watch” approach .
• They could have waited for a friendlier and more liberal
government in order to venture into the Indian market
on more favorable terms.
• This was the strategy employed by their eternal rivals
coke for entry into India.
• They waited till post liberalization era and as soon as
the shackles were released they jumped into the foray
with acquisitions of already established local brands
like Thums up, Citra , Limca and Gold spot.

22. Alternative Solution Contd...
• This not only provided physical manufacturing,
bottling, and distribution assets but also strong
consumer preference.
• This combination of local and global brands
enabled Coca-Cola to exploit the benefits of
global branding and global trends in tastes while
also tapping into traditional domestic markets.
• Leading Indian brands joined the Company's
international family of brands, including Coca-
Cola, diet Coke, Sprite and Fanta, plus the
Schweppes product range.

23. Alternate Solution-II
• They could have set up a research center in
India itself upfront for developing the cola
concentrate and then setting up facilities for
mass production and supply from India.
• Thus the problem of importing cola
concentrate would have been dealt with and
as far as the problem with the usage of foreign
brand name could have been solved by a tie-
up with an indigenous company.