The Countries of the G7

The G7, or "Group of seven," consists of eight large world economic powers. The G7, as the group is sometimes known, lacks Russia Canada France Germany Italy Japan Russia United Kingdom

THE INDIAN SOFT-DRINK INDUSTRY SCENARIO

Domestic firms in India, which once enjoyed the benefits of sheltered markets, are increasingly facing competition from global giants in 1990s. Sheltered market had once allowed Indian entrepreneurs to develop strong brands that have held there own against the onslaught of the multinational companies. Some domestic firms have chosen the strategy of tie-ups with MNCs. Others have tried to meet the competition head on. Whatever route Indian firms take to deal with competition from MNCs it is imperative for them to keep track of global strategies of these firms. Often the strategies undertaken at the local level are only part of the global strategies, because it is difficult for any firm to allow significant differences in approach in different markets.

Coca-Cola controlled the Indian market until 1977, when the Janta Party beat the Congress party of then Prime Minister Indira Gandhi. To punish Coca Colas principal bottler, a Congress party stalwart and long time Gandhi supporter, the Janta government demanded that Coca Cola transferred its syrup formula to an Indian subsidiary. Coca Cola backed and withdrew from the country.

India now left without both Coca Cola and Pepsi became a protected market. After Coca Cola made its exit from Indian market in1977, there was a vacuum in the soft drink market, advantage was taken by Parle and Pure drinks. Parley launched Thumps Up and gained a substantial and robust market share. In 1977 with a change in the government at the centre led to the exit of coke, which preferred to quit rather than dilute its equity to 40% in compliance with the provisions of FERA, the first national cola drink to emerge was Double Seven. In the mean time, Pure Dinks, Delhi, on Cokes exit switched over to Campa Cola, and, by the end of 1970s, Campa Cola was practically alone in the Cola market. 1

Parle introduced Thumps Up in the beginning of 1980s, followed by thrill by McDowells and Double Cola by Double Cola manufacturing Company (DCMC)-an NRIrun outfit with its plant at Nasik. An additional dimension to the Indian soft drink industry was that of fruit drinks, which were valued at Rs. 40 Crores and among the brands in the market, the leader was Parles Fruity with about 40% of the market share. The other players in this segment who have posed challenges to Parle are Godreg(with Jumpin) and Ahemdabad bases Pioma Industries Rasna Cola-Cola.

Setup in 1949, by 1978, Parle led the Indian soft drinks market with a share of 33%. Gold Spot and Limca were the clear winners, and later, Thumps Up also started contributing to its growth. Thus, Parley touched a market share of around 60% in 1990. However, with the arrival of Pepsi, Parles share decreased to 53% and Pepsi quickly attained a market share of about 20 percent. Till 1990, Parles chief rival was Pure Drinks, which was steadily losing out to Parley. After the arrival of Pepsi, the market share of Pure Drinks further deteriorated. This was mostly because Pure Drinks had smaller number of bottling plants and a limited distribution network exactly the same reason why Pepsi could not do much against Parle. Parle had 60 bottlers against Pepsis 20 and 2.1 lakh retailers against Pepsis 1.5 Lakh. Before 1992 , the Indian soft drink industry had not grown fast mostly due to high excise duties and government encouragement of fruit drinks over carbonated drinks. The Limca was largest selling brand of bottled soft drinks in India, from consumers point of view Cola was the most popular flavor. It accounted for about 40 percent of the market. Lime and Lemon drinks followed with about 30 percent, and Orange drinks had only about 20 percent of the market share. Carbonated soft drinks accounted for the rest 10 percent. From 1984 to 1992, the Rs, 1,200 Crore Indian soft drink industry grew at an average of 2.5 to 3 percent, the highest being 12.4 percent during 19841985. 2

Pepsi had begun its efforts in mid 1980s but only in 1990 it was able to make an entry in the Indian Cola market. In early 1985, the then government rejected a proposal with RPG GROUP. This involved the export of fruit juice concentrate from Punjab in return for the import of Cola concentrate. The deal offered was a 3:1 EXIM ratio.

The revised proposal made by Pepsi also met lots of resistance. The strongest opposition to the proposal came from the food and civil supplies ministry, which argued that India should be promoting fruit juices, not carbonated soft drinks. Opposition also came from CSIR, one of whose laboratories developed its own soft drink flavors. After more than 5 years of acrimonious battles Pepsi was finally launched in India in June 1990. To obtain the license for India, Pepsi had to export $5 of locally made products for every $1 of materials imported, and it had to agree to help the Indian government to initiate a second agricultural revolution. Pepsi has also had to take on Indian partners. Pepsi Co, Punjab Agro Industries Co-Operation (PAIC) and Voltas promoted the project.

Pepsi had a very significant first mover advantage in the Indian market. It did not have the condition of divestment of 49 per cent equity in downstream ventures attached to it when it received permission to invest in India. Pepsi had obtained the government approval for its downstream ventures prior to the FD1 guidelines that made Indian equity holding mandatory. Thus, in its original clearance, Pepsi was not only allowed to hold 100 per cent equity .in its holding company but was also allowed to carry out bottling and marketing operations.

The government approval, moreover, had allowed Pepsi to earn* out acquisition of assets to expand its business in the country. Pepsi used this clause in 3

its approval to buy out 100 per cent stake in some of the domestic bottling companies including its high profile buyout of Gujarat Bottling Company, the former Coke franchisee in Ahmedabad. (Industry ministry sources have clarified that while Pepsi would be required to seek fresh government approval if it picks up shares in domestic bottling companies as part of its portfolio investment, it does not need such approval if the assets are acquired for expansion.)

There was now a triangular battle between Parle, Pepsi and Pure Drinks. Pepsi launched 250 ml bottles in June 1990 to capture the 250 ml bottle-market of Thums Up (launched in November 1989). As a response, Thums Up ran ads downgrading Pepsi's taste and declared that it was a fast drink. Thums Up entered the brand war totally with blind taste test ads.

Thums Up launched Double Maha Cola, the 500 ml bottle, to prove that bigger is better in cola wars and was again first to introduce 'takeaway' 250 ml bottles for the first time in the Indian cola market. Pepsi got into more trouble when six months after its launch it caught government's attention regarding its commitments. Soon after, a show cause notice was issued to the company for prima facie violation of the conditions stipulated in the letter of intent with regard to the production of soft drink concentrate.

Coca Cola came back to India after 16 years when it was launched on October 24, 1993, at Agra. Coca-Cola was initially wooed by the Godrej group, Great Eastern Shipping and the Britannia Industries Ltd, led by Rajan Pillai. In March 1991, it signed an MOU (Memorandum of Understanding) with BIL and this proposal was accepted by the Chandrasekhar government. But relationship between the two companies turned sour over the export-oriented clause and finally on June 23, 1993,

Coca Cola got the permission to enter the country with a 100 per cent unit in India. On September 22. 1993, the company bought out the Parle brands. After the second coming, of the international varieties of Cola drinks, the market has witnessed a high-profile tussle between the global giants - Coca-Cola and PepsiCo. This tussle and the respective problems faced by the two firms in the Indian market are extremely instinctive. PepsiCo gained a significant first-mover advantage through its ability to gain early access to the market. Coke, after a couple of abortive attempts, seemed to have made an entry under ideal conditions in the market. However, it then faced dissensions within the ranks of its bottlers. Its manner of dealing with the bottlers seemed to lack Pepsi's finesse and India seemed to be one of the rare markets where Pepsi was holding its own against Coke and consolidating its position.

The companies have continued to wage their war in India. Coke, with the strategic move of buying out Parle, gained a huge market share overnight. Hut Pepsi is sparing no efforts to gain a larger share of the market. The potential in the Indian market is tremendous. The Indian market is roughly more than Rs 1,200 crore; moreover, the per capita consumption of three bottles in India is lagging way behind the US's astounding 700 bottles per capita consumption.

Both Coke and Pepsi have rightly realized that the immediate priority is in expanding the market by increasing the growth rates. The Indian market averaged a growth rate of 2.5 per cent between the years 1984-92. From 1992, when the Cola war took a serious turn, the growth rate has almost doubled. In 1995 the market grew by 20 per cent in volume term, with estimated sales of 140 million cases (one case :- 24 bottles of 300 ml each) up from 115 million cases in 1994.

The industry, prior to 1990, was witnessing sluggish growth rates (CAGR: around 5 per cent) with two domestic players: Parle and Pure Drinks. The entry of the cola giants, Coke and Pepsi, led to a rapid expansion in the size of the market 5

(CAGR for the first half of the 1990s: around 20 per cent). Coke's acquisition of Parle has turned the market into a duopoly. Also not only the market size is increasing, there is also a shift of consumer preference between the different soft drink segments. Whereas in 1990, cola was accounting for a third of all soft drinks sold, today it accounts for well over a half.

COMPANY PROFILE

COMPANY PROFILE
In 1902 the Pepsi Cola Company was launched in the back room of pharmacy and was applied in patent office for a trademark. The business begins to grow on June 16, 1903 Pepsi Cola was officially registered with the US patent office. That year Cola sold 7,968 gallons of syrup using them in exhilarating aids digestion. It also awarded for franchised to bottle Pepsi to independent investors, where number grew from just two in 1905 in cities of charlotte and Durham, to 15 the following year, and 40 by 1907.

Gold Spot is considered as the first branded soft drink in India. It was introduced by Parle in early forties. Coca-Cola was the first foreign soft drink to be introduced in Indian markets. The Coca-Cola Company entered India in the early fifties, when four bottling plants were setup at Bombay, Calcutta, Delhi and Kanpur. Coca-Cola enjoyed a good beginning and dominated the market. Parle exports private Ltd. the major domestic player later in 1970 introduced Limca, a lemon soft drink. Before Limca introduction, they had attentively introduced Cola Pepino which was soon with from the market.

In July 1977 Coca Cola left India following a public dispute over share holding structure and import permits. As per FERA regulations the company was required to indicate or clear operation. Coca-Cola left a big gap, which was filled by several companies who came forward pushing different brands in market. Parle products introduced their cola Thums Up; pure drinks introduced Campa Cola along with orange and lemon. Modern Bakeries introduced Double Seven Thrill Rush and Aprint. At the same time various regional soft brands played an independent role in their respective territories like Duke and Mangola etc.

After Coke was asked to leave India Pepsi began to lay plans to enter this huge market. Pepsi worked with an Indian business group in seeking govt. approval for its entry over the objections of both domestic soft drink companies and anti-multinational legislators, Pepsi saw the solution to lie in making an offer that Indian Govt. would find hard to refuse. Pepsi offered to help India export some of its agricultural products in a volume that would cover more than the cost of importing soft drink concentrate. Pepsi also promised to focus considerable selling efforts on rural areas to help their economic development. Pepsi further offered to transfer food processing packaging and water treatment to India in the way Pepsi started its operations in April 1989 for beverages, snack food and export business. In 1990 first Pepsi, Cola was produced in India.

PepsiCo entered India in 1989 and in the span of a little more than a decade, has grown to become the country's largest selling soft drinks company. The Company has invested heavily in India making it one of the largest multinational investors. The group has built an expansive beverage, snack food and exports business and to support the operations are the group's 39 bottling plants in India, of which 17 are company owned and 22 are franchisee owned.

PepsiCo stays committed to providing its consumers with top quality beverages. Its diverse portfolio of brands include the flagship cola brand - Pepsi; Diet Pepsi; 7Up; Mirinda; Mountain Dew; Slice fruit drink; Tropicana brand 100% fruit juices in various flavors; Aquafina packaged drinking water; Gatorade plus local brands Lehar Evervess Soda, Dukes Lemonade and Mangola.

PepsiCo is also a dominant player in the snack food segment in India. PepsiCo's snack food company Frito-Lay is the leader in the branded potato chip market. It manufactures Lay's Potato Chips; Cheetos extruded snacks, Uncle Chips; traditional namkeen snacks under the Kurkure and Lehar brands; and Quaker Oats.

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PepsiCo is one of the largest MNC exporters in India and its export business consist of three categories - agri business, commodities and Pepsi system sales. PepsiCo has made significant investments with the Punjab Agriculture University to develop a comprehensive agro-technology Programmed that has helped thousands of farmers across India improve the yield of their farms and the quality of their agricultural products. PepsiCo has leveraged its knowledge in contract farming to develop seaweed cultivation in Tamil Nadu and has partnered with the Government of Punjab to help farmers of the state through the utilization of developed technology for citrus farming.

As part of its sustainable development initiatives, PepsiCo India has been a committed leader in the promotion of rain water harvesting, water conservation recycling and the reduction of effluent discharge. PepsiCo has also established zero waste centers and PET recycling supply chains and assisted victims of natural disasters. PepsiCo stays dedicated in its endeavor to develop community outreach programs by supporting rural water supply schemes, administering medical camps in villages, providing computers to rural schools and creating opportunities for women in rural areas through vocational training as an alternate means of livelihood.

PepsiCo India has worked closely with the Defense forces in rehabilitation of Defense Personnel through projects like Mission Vijay-2. Under this project Pepsi in association with Castrol helped soldiers set booths in rural area to sell Pepsi and Castrol products there by helping them to not only earn a decent living but to also add some color to their lives. Through this project PepsiCo India also tries to give these soldiers distribution rights for its soft drinks. It gives PepsiCo India great pleasure in associating with Defense India and Samvedna for an event to bring cheers and smiles for our Jawaans of BSF (Border Security Force) at Wagah.

In the next year, 1991 production on Mirinda and 7 Up started. The production of Slice, Teem and Fountain Pepsi started in 1993 Coca-Cola came back again in October 11

1993 and launched in Agra. It joined hands with Parle Export Pvt. Ltd. to enter India and gradually took over the same company. The nineties also saw a new foreign entrant called Cadbury Schmeppes, which rolled out Canada Dry and Crush in Metropolitan cities.

Pepsi entered the cloudy lemon category by launching its Mirinda Lemon in 1998. In may 1999, a notification, presenting the presentation of food Adulteration (Fourth Amendment) rules 1999, allowed the use of the blended artificial sweeteners, as part time and a successful fame potassium in the formulation of soft drinks, which in what made the entry of diet Pepsi and diet coke. Coca-Cola also rolled out its popular clear lemon drink sprit in India at same year, 1999.

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Whats in Pepsi?

Pepsi contains:

Carbonated water, High fructose Glucose syrup/or Sugar color, Phosphoric acid, Caffeine, Citric acid and natural flavors.

Calories Total Fat (gm) Sodium (mg) Potassium (mg) Total Carbohydrates (gm) Sugars (gm) Protein (gm) Caffeine (mg)

100 0 25 10 27 27 0 25

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COMPANY STRUCTURE

PepsiCo India Holding Ltd. is created by Pepsi Company, to carry out the sales and marketing operation in India. Mr. Rajiv Bakshi, (G.M. business unit), heads the Indian Unit. There are three marketing units in India East and North, West and South. East & North units are headed by Mr. Prakash Aiyer. Each marketing unit is subdivided into state units, and their state units are divided into territories. Allahabad territory falls in U.P. unit of East and North Marketing unit.

Company owned bottling operation (cobo) of U.P. unit comprises of Share bottling plants at Sathariya (Jaunpur), Jainpur (Kanpur) and Bajpur (Nainital) which supply to six territories at Allahabad, Gorakhpur, Kanpur, Lucknow, Bareilly in U.P. and Uttranchal. This unit is headed by Mr. Saurabh Gupta (Unit Manager); he is assisted by Mr.Harsh Rai, Marketing Manager. The other staff in his office is finance controller, finance coordinator, MEM Coordinator, Legal Advisor, Marketing Executive, Accounts Executive and personal Executives.

Each territory is headed by territory Development Manager (TDM) who is assisted by one or two Accounts Development Coordinators (ADC) .The territory developments Manager (TDM) have a team of executives. These executives are Customer executives, Service executives, and Accounts executives. Executive working on Projects Mr. Rohan Arora is Territory Development Manager (TDM) and Mr. Ajay Nagar is Accounts Development Coordinator (ADC) of Allahabad Territory. The Customer executive in this territory is Mr. Subodh Kumar, Mr. Devendra Singh. The Customer Service Executives of this territory is Mr. Raghvendra and Accounts executive is Mr. Neelkamal.

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Allahabad territory is a big territory covering eastern districts of U.P. as Allahabad, Varanasi, Mirzapur, Ghazipur, Sonebhadra, Pratapgarh, Bhadoi, Kausambi, Jaunpur etc. There are 72 distributors in this territory. The annual turnover of company in this territory was 3 million crore in 2004.The turnover of the company in India was 115 million crore in the same year.

ORGANISATION CHART Business Unit Manager (India)

MUM (West)

Marketing Unit Manager (East & North)

MUM (South)

Unit Manager

TDM (Kanpur)

TDM Territory Development Manager TDM (Lucknow) (Allahabad)

TDM

TDM

(Gorakhpur) (Barreilly) (Uttranchal)

Territory Traini Coordinator

Account Development

CE (Mirzapur)

CE

CE

CE

CE

CE

CE

(Jaunpur) (Ghazipur)

(Pratapgarh)(Bhadoi)(Kausambi)(Sonebhadra)

CE

Customer Executive

(Varanasi)

(Allahaabd) 15

EPSICO HEAD QUARTERS

Pepsi co India world head Quarters is located in Purchase, N.Y. approximately 45 minutes from New York City. Edward Darrel Stone, One of Americas foremost architects, designed the seven-building headquarters complex that includes the Donald M.Kendall Sculpture collection in a garden setting.

The collection of works is focused on twentieth century

& features work by

masters such as Auguste Rodin, Henri Laurens, Henry Moore, Alexander Calder, Alberto Giacometti, Arnaldo Pamodoro & Claes Oldenburg.

COMPANYS GLOBAL STRATEGY

Set a winner growth goals if you act like number two, you will always be number two. Hiring people who love change and thrive on risk taking. Upset the rules of the market place. . Always anticipate the response you may provoke. Execution of a plan often derive success more then more marketing Encourage Executives to think laterally. Conjure Up those creative tactics to knack fizz out of its competition.

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PEPSICO MISSION

We dedicate our efforts to In India, only 40% people drinks soft drinks. So the main mission of Pepsi is to capture the Rural Markets to make it a one-man show. Hiring & training People who single handedly drive the business forward. Providing courteous, prompt & efficient service to our customer. Building long-term prosperity of our brands in the market place. Exploring & developing opportunities that helps in building competitive edges.

MARKET SIZE AND GROWTH RATE

The particular feature of market is that of positioning & targeting of various brands while cola brand of Coke is targeted at teenagers & is positioned as refreshment for mind & body. The Thums up brand is targeted at people in age group & is positioned as fun drink.

Soft Drink market size for Fy00 was around 270mm cases (6480ml bottle). The market, which was witnessing 5-6% growth in the early 1905 & even slower growth at around 2-3% in the late 80s. Presently the market growth has slowed down with growth rate of 7-8 per annum dawn with growth rate of 7-8% per annum compared to 22% growth rate in the previous year. The market size for Fy01 is expected to be 7000mmbottles. The market growth of 22% till last year target still due to high excise duty of 40% leading to higher price of the end product. In terms of SKUS the market is Skewed towards 300ml which constitutes around 80-85% of the market rest in the form of other pack, Size, But with increasing occasion led & home refrigeration led consumption the sales of bigger SKUs like more than 1 liter pack size has increased this has led to increase contribution from pet bottles sales up to 75% are in Urban areas. 17

Another skew ness is in terms of the time of the year when the consumption takes place. Sale of soft of Drinks takes place during summer while just 5-6% of the total sales take place in the winter. In summer the high season starts for 70-75 days, which contributes more than 50% of the total years sales. BRAND PROFILE

PepsiCo Company provides five brands of Soft drinks. In all brands of Pepsi one is Soda, Second Mineral water and other are running successfully in the market. At present time Pepsi provides two new soft drinks. Dew Mountain and Blue Pepsi and above marketed with reasonably good success. They are completely defined below1. Pepsi 2. Blue Pepsi 3. Pepsi Diet 4. Miranda (Lemon + Mango) 5. Slice 6. 7up 7. Aquafina 8. Dew Mountain

Now here we will discuss about the market shares of each brands of soft drinks. There market share are as follows-

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Soft Drinks Pepsi Mirinda (Orange) Mirinda (Lemon) Slice Teem Soda 7UP Aquafina Blue Pepsi Dew Mountain Pepsi Diet SOFT DRINKS Pepsi Mirinda Orange Mirinda Lemon Slice 7up Teem Soda Pepsi Diet Aquafina Dew mountain Blue Pepsi

Market Share 57% 16% 2% 1.5% Not Available 1.5% 3% 2% 8% 6% Quantity 200ml, 300ml, 600ml, 1lt, 2lt. 200ml, 300ml, 600ml, 1lt, 2lt 200ml, 300ml, 600ml, 1lt, 2lt 250ml, 500ml 200ml, 300ml, 2lt 300ml, 600ml 330ml, 500ml 1lt 200ml 500ml of Quantity Details of all brands Soft drinks are given as below

The PepsiCo company had provided its 300ml bottle soft drinks(B.S.D.) in the month of June 95, 200ml launched in the year of 1999 and I lit, 1.5 lit bottle launched in the year 1996 while 500ml and 2 it launched in 2000, Mineral water, Aquafina had been launched in the year 2001. 19

Dew mountain, Blue Pepsi 200ml, 500, ml, has been launched in the year 2003.

PEPSI DISTRIBUTION CHANNEL

Pepsi's main strategy is to operate franchisee (Franchisees owned Bottling operation). Pepsi indulges mainly in direct contribution lo retailer and resorts to indirect in certain areas. Pepsi distributes through three channels which is shown below:

PEPSI BOTTLING PLANT WAREHOUSE FRANCHISEE DEALERS RETAILERS

CONVENTIONAL RETAILERS

NON-CONVENTIONAL RETAILERS

There is no involvement of wholesalers in the distribution of products. It is more like an agent network. The companies have divided the country into various regions and established a franchisee in each region. The franchisees have their own bottling plants and manage all the day to day operations.

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PACKAGING

Packaging plays a vital role in increasing decreasing in the sales of the products. Thus, packaging of the product should be attractive and product should be available in different sizes. To keep in mind the importance of packaging PepsiCo and Coca cola is adopting new technology for looking the products attractive and producing the product in different size. The different pack sizes available are 200 ml, 300 ml, 330 ml (Can), 600 ml (promotional pack with 100 ml extra), I liters., 1.5 liters., 2 liters., and 200 ml / 250 ml (slice).

RANGES OF DIFFERENT PACK AVAILABLE 1. GLASS 200 ml, 300 ml, 1 liter and 250 ml. 2. PET - 500 ml, 600 ml, 1 liter and 2 liter.

3. TETRA - 200 ml (SLICE) 4. CANS - 330 ml IN GLASS CANS 24 cans * 330 ml = 1 Case 21 24 Bottles * 200 ml = 1 Case 24 Bottles * 250 ml = 1 Case 24 Bottles * 300 ml = 1 Case 6 Bottles * 1000 ml = 1 Case

IN PET 24 Bottles * 500/600 ml = 1 cartoons 12 Bottles * 1000 ml 9 Bottles * 2000 ml 12 Bottles * 1500 ml = 1 cartoons = 1 cartoons = 1 cartoons

TETRA 24 Bottles * 200 ml = 1 Case

ADVERTISING STRATEGIES ADOPTED BY AERATED SOFT DRINK INDUSTRY

Soft drinks is perhaps the most hard fought product categories in India in every respect - media, events, distribution, pricing, communication, endorsements and so on... Every year it consistently emerges as one of the top 10 categories on television. We, at AdEx India, have looked at year 2003 to understand the year that was for this exceptionally competitive segment! One clear and predictable pattern in 2003 was the two clear peaks of ad spend one during the world cup and the other during the festive time. Interestingly, while Pepsi dominated media budgets during World Cup, Coca-Cola seems to have been the dominant spender in the month of September. However, this time we at AdEx thought of dwelling on aspects of advertising in terms of strategy adopted by the different players in this category and the duration of advertising across genres on TV and press. This paper tries to throw some light on the following aspects:

Genre wise and channel wise composition of advertising on TV Advertising strategy adopted by the aerated soft drink players on TV and press Zone wise and genre wise advertising on press Specific case: zone wise and genre wise advertising for Pepsi and Coke

Genre wise analysis on aerated drinks establishes that this category is heavily advertised on feature films, music, cricket and soaps. Major part of the advertising on Cricket can be attributed to the fact that Pepsi was the official sponsor of the Cricket

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World Cup 2003. However, apart from cricket Pepsi is actively present on other types of sports such as soccer, wrestling etc. FIGHT FOR THE MARKET SHARES

With the cola majors busy sharpening their arsenal, it's a pitched battle all the way -- whether on television or in the marketplace. '

According to figures released by IMRB, in the month of January-February, the combined market share of all carbonated soft drinks (CSD) beverages under PepsiCo's domestic product portfolio - including Pepsi, Mirinda Orange, Mirinda Lemon and 7 Up -stands at 48.3 per cent. The IMRB data adds that with the exception of Mirinda Lemon, all PepsiCo beverages have led over Coca-Cola's brands in terms of market share in this period.

However, when contacted by Business Line, Coca-Cola's official spokesperson disagreed with these figures. According to ORG-MARG, which tracks market figures for Coca-Cola India, the combined market share of all Coca-Cola brands put together stands at 58 per cent. While declining to provide individual market share of brands under the company's portfolio, Coca Cola India's official spokesperson sa1d, "We do not agree with the figures given by PepsiCo. If our turnover last year was almost double theirs, how can their market shares be higher? The market shares they are stating are obviously questionable."

Pepsi's official spokesperson reiterated that among colas, which occupy close to 70 per cent of the approximately 270-millioncases CSD market, Brand Pepsi's market share stands at 51 per cent. The combined market shares of Coca-Cola and Thums Up stands at 49 per cent, according to IMRB.

In the carbonated orange segment, which accounts for roughly 15 per cent of the 23

overall CSD market, the market share for Mirinda Orange has been estimated at 53' per cent by IMRB. The market share of Coca-Cola's Fanta brand is estimated at 47 per cent.

In the cloudy lemon segment, which accounts for roughly 10 per cent of the CSD market, Coca-Cola's Limca brand leads PepsiCo's Mirinda Lemon by a huge margin. Limca has a 75 per cent size of this segment, while the share of Mirinda Lemon is 25 per cent. According to industry estimates; the share of the cloudy lemon segment has slipped below that of the orange segment. Interestingly, the cloudy lemon segment does not exist in most developed markets, and is primarily a developing country phenomenon.

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PEPSICO: SOON TO HIT $ 1-BILLION MARK IN INDIA

PepsiCo will soon join the elite band of companies with $l-billion sales in India. The company currently has sales of $700 million. Since 1989 the $27 -billion food and beverages giant has invested $700 million in India and seen a steady double-digit growth in its volumes. The Indian operations are the Atlanta based companys: fifth largest outside the US now.

"We are on track to make it the second or third largest," Steve Reinemund, chairman & CEO PepsiCo told the media in New Delhi. Reinemund's visit was preceded by that of E Neville Isdell, chairman of the board and CEO of The Coca Cola Company, who chose to visit India on taking charge of Coke's global operations a few months ago.

Reinemund said PepsiCo's Rs5-per-packaffor_bility strategy initiated by Coke and Pepsi had worked well in India and helped the company increase its consumer base from 150 million to 250 million. He said with the strategy PepsiCo had attained critical mass. "It is time now to increase the depth of consumption," he says.

However, he admitted that the company was forced to hike its prices recently as there was an affordability challenge all over the world. "We have learnt this lesson and reverted to higher price points (in India) after having achieved our objective of 150 million consumer footprints. We do not see any depth in our future pricing and therefore, we have changed our strategy."

Pepsi Co is now making operating profits in India and its exports are worth over $60 million, up from just $3 million in 1991. Reinemund was especially upbeat about the

25

company's snacks business Frito Lay, in India, which he said was the fastest growing segment for five consecutive years. "India is clearly one of our priority markets," he said.

Extolling Indian corporate talent, Reinemund said PepsiCo India was being run without any expatriates and40 officials from the Indian operations had so far been placed in the company's global businesses. We are planning a significant increase in our manpower exports from India," he said. He said PepsiCo employed more than 4,000 people in India directly and over 60,000 indirectly with its concept of contract farmiJ1g in India. It has relationships with over 2,000 farmers. The company introduced farmers in India to six high-yield potato varieties and helped development of new seeds which helped increase the total annual production of tomatoes from 28,000 tones to over 250,000 tones in Punjab.

The company had no plans to make any structural changes in India said Reinemund, since of the 37 bottling plants in the country, 17 company-owned bottling plants accounted for 55 per cent of total production. He dismissed reports that arch rival Coke was closing in on the sales of Pepsi products and said Pepsi's leadership position was because Indians loved its products.

Reinemund met finance minister P Chidambaram and planning commission deputy chairman Montek Singh Ahluwalia later in the day.

Sources said Reinemund was likely to discuss issues of future investments and the high taxation policy of the government towards the soft drinks industry and the overall fiscal environment with Chidambaram and other senior government officials. Coca-Cola and PepsiCo have been urging the government for lowering taxes, specially the special excise duty of eight per cent levied on carbonated soft drinks.

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This is Reinemund's first visit to India and signifies the increasing importance of Indian operations for PepsiCo. India is now among the top eight businesses of PepsiCo worldwide in terms of beverage and snack sales and second only to China within Asia.

ADVERTISING AND PUBLICITY

PepsiCo is one of the biggest end spenders in India. It is also one of the biggest global end spenders. It has a long list of endorsers from pop star Ricky Martin to film star Sharukh Khan, Karina Kapoor, Pritey Jienta, Saif Ali Khan, Fardin Khan and Amitabh Bachchan. Hindustan Thompson Associates, the big guest advertising agency of India has the account of PepsiCo, is known for its broad cast advertising but it also spends a lot in non broad cast advertising i.e. hoarding, banners, poster, stickers, specialties, hanger, dealer board, glow signboard, wall paintings and news paper, the expenses of these type of advertising are made at territory or unit level. Allahabad territory has assigned two local advertising agencies R. D. Associates and Krishna for its territorial advertising.

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Pepsi's Products

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MARKETING SCHEMES

For increasing the market share and beating the competitors company provides different schemes on different time. The schemes are of two types one for Consumers and other for retailers. During my training period two types of consumer schemes and two types of retailer schemes were going on. 1. Free Flavors, To Retailers: Company offers few bottle flavors free to retailers on purchase of one carat of flavor on some specific days. The free flavors scheme varies from one bottle to many bottles. 2. Display Rack Scheme: This scheme is only for retailers. In this scheme company provides a Pepsi rack to retailer. The rack is filled with different bottles of Pepsi. The retailers are instructed that if they will maintain their racks in the same condition as it was when it was purchased. After completion of one-month different gift packs are distributed to the retailers. 3. Hai Koi Jawab: This scheme was launched on 300ml bottle of Pepsi. This is U.T.C. scheme meaning Under the Crown. In this scheme some number are given under the bottle of Pepsi and company announces some lucky number. If this number is matched with the number under the crown number then the owner of that bottle wins different cash prizes. 4. Miranda U.T.C: This scheme was launched on 300ml bottle of Miranda. This is U.T.C. Scheme meaning under the crown. In this scheme some dollar amount is given under the bottle and the consumer may collect these dollars and add it. Company provided different gift packs on different crown number. Their schemes are offered by the company to maintain the competition at it is offered on those days when Coca-Cola offers any similar scheme.

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4 PS 4 Ps is the main features that directly affect the organization without 4 Ps organization is not able to produce the product. 4 Ps represent the main features of product. Many possibilities can be collected into four groups of Variables know as Four Ps i.e. product, price, place, promotion.

Product: Product means the good and service combination of the company offered to the target market. Company changes the sizes, variety, flavor brand name of the product after one or two year.

Price: Price is the amount of money which customers have to pay to obtain the product calculates suggested retails prices that its dealers might charge for sources. But dealers rarely charge the full sticker price.

Place: They are mostly available in al place but easily available in the Urban Market but not frequently found in Rural Market.

Promotion: Promotion means activities that communicate the merit of the product and persuade target customers to buy it. The measurement factor to promote the Pepsi product is to increase good transportation in rural market. If the Pepsi is available to capture the rural market then it is certain that it will occupy first position of soft drinks industry.

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Product Product Variety Quality Sizes Features Services Brand Name Warranties Packaging- Returns

Price List Price Discounts Allowances Payment Period Creditors

Target Customers Intended Positional

Place

Promotion

Advertising Personal Setting Sales Promotion Public Relations

Channels Coverage Assortments Locations Logistic Inventory Transportation

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The Coca-Cola Company One Coca-Cola Plaza Atlanta, GA 30313 Phone: 404-676-2121 Fax: 404-515-5997 Web Site: http://www.cocacola.com/

DETAILS Dow Jones Composite Dow Industrials S&P 100 S&P 500 S&P 1500 Super Comp Consumer Goods Beverages - Soft Drinks 92,400

Index Membership:

Sector: Industry: Employees (last reported count):

OFFICERS
Pay Mr. Muhtar Kent , 58 Chief Exec. Officer, Pres, Director and Member of Exec. Committee Mr. Gary P. Fayard , 56 Chief Financial Officers and Exec. VP Mr. Alexander B. Cummings Jr., 52 Chief Admin. Officer, Exec. VP, Pres of Africa Group and Chief Operating Officer of Africa Group Mr. Jos Octavio Reyes , 56 Pres of Latin America and Chief Operating Officer of Latin America Mr. Irial Finan , $ 1.83M $ 5.60M $0 Exercised

$0

$ 1.59M

$0

$ 1.86M

$0

$ 2.13M $0 51 Exec. VP and Pres of Bottling Investments & Supply Chain Dollar amounts are as of 31-Dec-08 and compensation values are for the last fiscal year ending on that date. "Pay" is salary, bonuses, etc. "Exercised" is the value of options exercised during the fiscal year.

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REUTERS ABRIDGED BUSINESS SUMMARY

The Coca-Cola Company manufactures, distributes, and markets nonalcoholic beverage concentrates and syrups worldwide. It principally offers sparkling and still beverages. The companys sparkling beverages include nonalcoholic ready-to-drink beverages with carbonation, such as energy drinks, and carbonated waters and flavored waters. Its still beverages consist of nonalcoholic beverages without carbonation, including non-carbonated waters, flavored waters and enhanced waters, juices and juice drinks, teas, coffees, and sports drinks. The Coca-Cola Company also offers fountain syrups, syrups, and concentrates, such as flavoring ingredients and sweeteners. The company markets its nonalcoholic beverages under the Coca-Cola, Diet Coke, Fanta, and Sprite brand names. The Coca-Cola Company also owns mineral water brands Kildevaeld and Kurvand in Denmark and soft drink brand Hyvaa Paivaa in Finland. It sells its finished beverage products primarily to distributors, and beverage concentrates and syrups to bottling and canning operators, distributors, fountain wholesalers, and fountain retailers. The company was founded in 1886 and is headquartered in Atlanta, Georgia.

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COKE IN INDIA
Coca-Cola was the leading soft drink brand in India until 1977 when it left rather than reveals its formula to the government and reduces its equity stake as required under the Foreign Exchange Regulation Act (FERA) which governed the operations of foreign companies in India. After a 16-year absence, Coca-Cola returned to India in 1993, cementing its presence with a deal that gave Coca-Cola ownership of the nation's top soft-drink brands and bottling network. Cokes acquisition of local popular Indian brands including Thums Up (the most trusted brand in India2 1), Limca, Maaza, Citra and Gold Spot provided not only 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. In 2000, the company launched the Kinley water brand and in 2001, Shock energy drink and the powdered concentrate Sunfill hit the market.

From 1993 to 2003, Coca-Cola invested more than US$1 billion in India, making it one of the countrys top international investors.22 by 2003, Coca-Cola India had won the prestigious Woodruf Cup from among 22 divisions of the Company based on three broad parameters of volume, profitability, and quality. Coca-Cola India achieved 39% volume growth in 2002 while the industry grew 23% nationally and the Company reached break-even profitability in the region for the first time.2 3 Encouraged by its 2002 performance, Coca-Cola India announced plans to double its capacity at an investment of $125 million (Rs. 750 crore) between September 2002 and March 2003.

Coca-Cola India produced its beverages with 7,000 local employees at its twenty-seven wholly-owned bottling operations supplemented by seventeen

franchisee-owned bottling operations and a network of twenty-nine contract-packers to manufacture a range of products for the company. The complete manufacturing

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process had a documented quality control and assurance program including over 400 tests performed throughout the process.

The complexity of the consumer soft drink market demanded a distribution process to support 700,000 retail outlets serviced by a fleet that includes 10-ton trucks, open-bay three wheelers, and trademarked tricycles and pushcarts that were used to navigate the narrow alleyways of the cities.25 In addition to its own employees, Coke indirectly created employment for another 125,000 Indians through its procurement, supply, and distribution networks.

Sanjiv Gupta, President and CEO of Coca-Cola India, joined Coke in 1997 as Vice President, Marketing and was instrumental to the companys success in developing a brand relevant to the Indian consumer and in tapping Indias vast rural market potential. Following his marketing responsibilities, Gupta served as Head of Operations for Company-owned bottling operations and then as Deputy President. Seen as the driving force behind recent successful forays into packaged drinking water, powdered drinks, and ready-to-serve tea and coffee, Gupta and his marketing prowess were critical to the continued growth of the Company.

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HISTORY OF COKE

The Early Days

Coca-Cola was created in 1886 by John Pemberton, a pharmacist in Atlanta, Georgia, who sold the syrup mixed with fountain water as a potion for mental and physical disorders. The formula changed hands three more times before Asa D. Candler added carbonation and by 2003, Coca-Cola was the worlds largest manufacturer, marketer, and distributor of nonalcoholic beverage concentrates and syrups, with more than 400 widely recognized beverage brands in its portfolio. With the bubbles making the difference, Coca-Cola was registered as a trademark in 1887 and by 1895, was being sold in every state and territory in the United States. In 1899, it franchised its bottling operations in the U.S., growing quickly to reach 370 franchisees by 1910.10 Headquartered in Atlanta with divisions and local operations in over 200 countries worldwide, Coca-Cola generated more than 70% of its income outside the United States by 2003.

International expansion Cokes first international bottling plants opened in 1906 in Canada, Cuba, and Panama.11 By the end of the 1920s Coca-Cola was bottled in twenty-seven

countries throughout the world and available in fifty-one more. In spite of this reach, volume was low, quality inconsistent, and effective advertising a challenge with language, culture, and government regulation all serving as barriers. Former CEO Robert Woodruffs insistence that Coca-Cola wouldnt buffer the stigma of being an intrusive American product,36 and instead would use local bottles, caps, machinery, trucks, and personnel contributed to Cokes challenges as well with a lack of standard processes and training degrading quality. Coca-Cola continued working for over 80 years on Woodruffs goal: to make Coke available wherever and whenever consumers wanted it, an arms reach of

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desire. The Second World War proved to be the stimulus Coca-Cola needed to build effective capabilities around the world and achieve dominant global market share. Woodruffs patriotic commitment that every man in uniform gets a bottle of Coca-Cola for five cents, wherever he is and at whatever cost to our company was more than just great public relations. As a result of Cokes status as a military supplier, CocaCola was exempt from sugar rationing and also received government subsidies to build bottling plants around the world to serve.

Turn of the Century Growth Imperative The 1990s brought a slowdown in sales growth for the Carbonated Soft Drink (CSD) industry in the United States, achieving only 0.2% growth by 2000 (just under 10 billion cases) in contrast to the 5-7% annual growth experienced during the 1980s. While per capita consumption throughout the world was a fraction of the United States, major beverage companies clearly had to look elsewhere for the growth their shareholders demanded. The looming opportunity for twenty-first century was in the worlds developing markets with their rapidly growing middle class populations.

The Worlds Most Powerful Brand Inter brands Global Brand Scorecard for 2003 ranked Coca-Cola the #1 Brand in the World and estimated its brand value at $70.45 billion. The rankings methodology determined a brands valuation on the basis of how much it was likely to earn in the future, distilling the percentage of revenues that could be credited to the brand, and assessing the brands strength to determine the risk of future earnings forecasts. Considerations included market leadership, stability, and global reach, incorporating its ability to cross both geographical and cultural borders.

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From the beginning, Coke understood the importance of branding and the creation of a distinct personality.1 8 Its catchy, well-liked slogans1 9 (its the real thing38 (1942, 1969), things go better with Coke38 (1963), coke is its (1982), cant beat the Feeling (1987), and a 1992 return to cant beat the real thing38) 20 linked that personality to the core values of each generation and established Coke as the authentic, relevant, and trusted refreshment of choice across the decades and around the globe.

Marketing Cola in India

The post-liberalization period in India saw the comeback of cola but Pepsi had already beaten Coca-Cola to the punch, creatively entering the market in the 1980s in advance of liberalization by way of a joint venture. As early as 1985, Pepsi tried to gain entry into India and finally succeeded with the Pepsi Foods Limited Project in 1988, as a JV of PepsiCo, Punjab government-owned Punjab Agro Industrial Corporation (PAIC), and Voltas India Limited. Pepsi was marketed and sold as Lehar Pepsi until 1991 when the use of foreign brands was allowed under the new economic policy and Pepsi ultimately bought out its partners, becoming a fully-owned subsidiary and ending the JV relationship in 1994.

While the joint venture was only marginally successful in its own right, it allowed Pepsi to gain precious early experience with the Indian market and also served as an introduction of the Pepsi brand to the Indian consumer such that it was well-poised to reap the benefits when liberalization came. Though Coke benefited from Pepsi creating demand and developing the market, Pepsis head-start gave Coke a disadvantage in the mind of the consumer. Pepsis appeal focused on youth and when Coke entered India in 1993 and approached the market selling an American way of life, it failed to resonate as expected.

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2001 Marketing Strategy

Coca-Cola CEO Douglas Daft set the direction for the next generation of success for his global brand with a Think local, act local mantra. Recognizing that a single global strategy or single global campaign wouldnt work, locally relevant executions became an increasingly important element of supporting Cokes global brand strategy.

In 2001, after almost a decade of lagging rival Pepsi in the region, Coke India reexamined its approach in an attempt to gain leadership in the Indian market and capitalize on significant growth potential, particularly in rural markets. The foundation of the new strategy grounded brand positioning and marketing communications in consumer insights, acknowledging that urban versus rural India were two distinct markets on a variety of important dimensions. The soft drink categorys role in peoples lives, the degree of differentiation between consumer segments and their reasons for entering the category, and the degree to which brands in the category projected different perceptions to consumers were among the many important differences between how urban and rural consumers approached the market for refreshment.

In rural markets, where both the soft drink category and individual brands were undeveloped, the task was to broaden the brand positioning while in urban markets, with higher category and brand development, the task was to narrow the brand positioning, focusing on differentiation through offering unique and compelling value. This lens, informed by consumer insights, gave Coke direction on the tradeoff between focus and breadth a brand needed in a given market and made clear that to succeed in either segment, unique marketing strategies were required in urban versus rural India.

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Rural Success
Comprising 74% of the country's population, 41% of its middle class, and 58% of its disposable income, the rural market was an attractive target and it delivered results. Coke experienced 37% growth in 2003 in this segment versus the 24% growth seen in urban are as. Driven by the launch of the new Rs. 5 product, per capita consumption doubled between 2001-2003. This market accounted for 80% of Indias new Coke drinkers, 30% of 2002 volume, and was expected to account for 50% of the companys sales in 2003.

Brand Localization Strategy: The Two Indies

India A: Life ho to aisi
India A, the designation Coca-Cola gave to the market segment including metropolitan areas and large towns, represented 4% of the countrys population.3 3 This segment sought social bonding as a need and responded to inspirational messages, celebrating the benefits of their increasing social and economic freedoms. Life ho to aisi, (life as it should be) was the successful and relevant tagline found in Coca-Colas advertising to this audience.

India B: Thanda Matlab Coca-Cola

Coca-Cola India believed that the first brand to offer communication targeted to the smaller towns would own the rural market and went after that objective with a comprehensive strategy. India B included small towns and rural areas, comprising the other 96% of the nations population. This segments primary need was out-of-home thirst-quenching and the soft drink category was undifferentiated in the minds of rural consumers. Additionally, with an average Coke costing Rs. 10 and an average days wages around Rs. 100, Coke was perceived as a luxury that few could afford.

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In an effort to make the price point of Coke within reach of this high-potential market, Coca-Cola launched the Accessibility Campaign, introducing a new 200ml bottle, smaller than the traditional 300ml bottle found in urban markets, and concurrently cutting the price in half, to Rs. 5. This pricing strategy closed the gap between Coke and basic refreshments like lemonade and tea, making soft drinks truly accessible for the first time. At the same time, Coke invested in distribution infrastructure to effectively serve a disbursed population and doubled the number of retail outlets in rural areas from 80,000 in 2001 to 160,000 in 2003, increasing market penetration from 13 to 25%. Cokes advertising and promotion strategy pulled the marketing plan together using local language and idiomatic expressions. Thanda, meaning cool/cold is also generic for cold beverages and gave Thanda Matlab Coca-Cola delicious multiple meanings. Literally translated to Coke means refreshment, the phrase directly addressed both the primary need of this segment for cold refreshment while at the same time positioning Coke as a Thanda or generic cold beverage just like tea, lassi, or lemonade. As a result of the Thanda campaign, Coca-Cola won Advertiser of the Year and Campaign of the Year in 2003.

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CORPORATE SOCIAL RESPONSIBILITY

As one of the largest and most global companies in the world, Coca-Cola took seriously its ability and responsibility to positively affect the communities in which it operated. The companys mission statement, called the Coca-Cola Promise, stated: The Coca-Cola Company exists to benefit and refresh everyone who is touched by our business. The Company has made efforts towards good citizenship in the areas of community, by improving the quality of life in the communities in which they operate, and the environment, by addressing water, climate change and waste management initiatives. Their activities also included The Coca-Cola Africa Foundation created to combat the spread of HIV/AIDS through partnership with governments, UNAIDS, and other NGOs, and The Coca-Cola Foundation, focused on higher education as a vehicle to build strong communities and enhance individual opportunity. Coca-Colas footprint in India was significant as well. The Company employed 7000 citizens and believed that for every direct job, 30-40 more we re created in the supply chain. Like its parent, Coke Indias Corporate Social Responsibility (CSR) initiatives were both community and environment-focused. Priorities included education, where primary education projects had been set up to benefit children in slums and villages, water conservation, where the Company supported community-based rainwater harvesting projects to restore water levels and promote conservation education, and health, where Coke India partnered with NGOs and governments to provide medical access to poor people through regular health camps. In addition to outreach efforts, the company committed itself to environmental responsibility through its own business operations in India including. Environmental due diligence before acquiring land or starting projects. Environmental impact assessment before commencing operations. Ground water and environmental surveys before selecting sites.

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 Compliance with all regulatory environmental requirements. Ban on purchasing CFC-containing refrigeration equipment. Waste water treatment facilities with trained personnel at all company-owned bottling operations. Energy conservation programs. 50% water savings in last seven years of operations

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