1. Coke and Pepsi
Learn to Compete in India
presented by:
Parth singh-B25
Rohit anand-B34
Renu luthra-B31
Sahil wadhwa- B
Pankaj luthra
Ishank awasthi

2. Political Environment in India
Key Issues
◦ India seen as unfriendly to foreign
investors for many years
◦ The “Principle of Indigenous Availability”
 Policy banning imports being sold in India
◦ The Liberalization of India’s Government
in 1991
 “New Industrial Policy”
 Trade rules & regulations simplified
 Foreign investment increased
◦ Pepsi enters in 1986
◦ Coca-Cola follows in 1993

3. Indian Laws
◦ Unlawful to market under their Western
name in India
 Pepsi became “Lehar Pepsi”
 Coca-Cola merged with Parle and became “Coca-
Cola India”
◦ Different Laws for Pepsi and Coke
 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

4. Problems
◦ India forced Coke to sell 49% of its equity to
Indian investors in 2002
◦ Coke asked for a second extension that would
delay it until 2007
 India denied this
◦ Pepsi was held to this since they entered India in
a different year.
◦ Coke asked the Foreign Investment Promotion
Board to block the votes of the Indian
shareholders who would control 49% of Coke
◦ Change in oversight of the FIPB
 Past lobbying efforts made useless

5. Could these problems have been forecasted
prior to market entry?
◦ Probably not
 Inconsistent, and changing government
How could these developments in the
political arena have been handled differently?
◦ Coke could of agreed to start new bottling plants
instead of buying out Parle, and thus wouldn’t of
had to agree to sell 49% of their equity

6. Timing of Market Entry
 Pepsi (early entry-1986)
◦ Advantages
 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
◦ Disadvantages
 Were forced to change their name to Lehar Pepsi
 Govt. limited their soft drink sales to less than 25% of total sales
 Struggled to fight off local competition

7. Coca-Cola (late entry-1993)
◦ Advantages
 Were able to buy 4 bottling plants from industry leader Parle
 Also bought Parle’s leading brands: Thums Up, Limca, Citra,
Gold Spot and Mazaa
 Set up 2 new ventures with Parle to bottle and market
product
◦ Disadvantages
 Denied entry until 1993 because Pepsi was already there
 Harder to establish market share with Pepsi there
 Were not allowed to buy back 49% of equity

8. Responses to India’s Enormity
Product Policies
◦ Catering to Indian tastes
 Entering with products close to those already
available in India such as colas, fruit drinks,
carbonated waters
◦ Waiting to introduce American type drinks
 Coca-Cola introducing Sprite recently
◦ Introducing new products
 Bottled water

9. Promotional Activities
◦ Both advertise and use promotional material
at Navrartri
 Pepsi gives away premium rice and candy with Pepsi
 Coca-Cola offers free passes, Coke giveaways as
well as vacations
◦ Use of different campaigns for different areas
of India
 “India A” campaigns try to appeal to young
urbanites
 “India B” campaigns try to appeal to rural areas

10. Pricing Policies
◦ Pepsi started out with an aggressive pricing
policy to try to get immediate market share
from Indian competitors
◦ Coca-Cola cut its prices by 15-25% in 2003
 Attempt to encourage consumption to try to
compete with Pepsi and gain market share

11. Distribution Arrangements
◦ Production plants and bottling centers placed
in large cities all around India
◦ More added as demand grew and as new
products were added

12. Coke and Pepsi’s Glocalization
(Global + local) Strategies

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

15. Coca-Cola
First joined forces with the local snack food
producer Britannia Industries India Ltd. in
the early 90’s.
Formed a joint venture with the market
leader Parle in 1993
For the 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, a resort
state in western India

16. Coca-Cola also hired several famous
“Bollywood” actors to endorse their
products.

17. Coca-Cola India’s Mistakes
Enters Market at the Wrong Time
◦ By entering at this time, Coca-Cola India agreed to
abide by all the Foreign Investment Laws of that year.
Coca-Cola India tries to expand investment
◦ Government allowed acquisition only if Coca-Cola
agreed to sell 49% of equity within 2 years
Coca-Cola tried to get extensions…twice
◦ India granted the first extension, denied the second
Coca-Cola India tried to deny the upcoming
Indian shareholders voting rights
◦ Foreign Investment Promotion Board (FIPB) Denies
This

18. 1st Mistake
◦ Coca-Cola should have been more careful of
when they entered the market and what they
were promising when they entered.
2nd Mistake
◦ Coca-Cola should not have tried to weasel
their way out of promises that they made.
These mistakes hurt Coca-Cola’s image
and reputation as an International
Company

19. Coke or Pepsi in the Long Run?
Pepsi
◦ Better marketing and advertising strategies
◦ More widely accepted
◦ More market share
Coke
◦ Government conflicts
◦ Trailing Pepsi in market share
Pepsi will fare better in the long run

20. Pepsi’s Lessons Learned
Beneficial to keep with local tastes
Beneficial to pay attention to market
trends
Celebrity appeal makes for exceptional
advertising
It pays to keep up with emerging trends
in the market

21. Coca-Cola’s Lesson’s
Learned
Pay specific attention to deals made with
the government
Establish a good business relationship
with the government
Investment in quality products
Advertising is crucial