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Marketing Strategy of

Coca- Cola and Its


Comparison with Pepsi

A Term Paper
(MBM 204)

Submitted To: Submitted By:


Dr. V.S. Caprihan Ankita Gupta
Faculty of Mgmt 107653
MBA Integrated
TABLE OF CONTENTS

S. No. CONTENTS PAGE


No.
1. Introduction 1.
2. The Coca-Cola Company- An Overview
3. Coca-Cola Entry In India
4. Brands of Coca-Cola in India
5. The Pepsico Company- An Overview
6. Pepsico Entry in India
7. Brands of Pepsico in India

8.

9.
INTRODUCTION
Soft drinks have become part and parcel of the Indian lifestyle. Be it children, the college kid
or the middle aged Indian soft drinks are enjoyed by one and all in the country. Especially
after the influx of a number of fast food joints in India soft drinks have gained more
popularity. Food like pizzas, burgers and French fries go hand in hand with soft drinks.

Soft drinks are enormously popular beverages consisting primarily of carbonated water,
sugar, and flavouring. A nonalcoholic, flavored, carbonated beverage usually commercially
prepared and sold in bottles or cans.

Gone are the days when a soft drink was enjoyed to the combat a sunny day. Today soft
drinks are enjoyed with almost every meal that one has outside his/her home. Despite several
issues that crept up regarding the ingredients used behind the manufacturing of soft drinks the
market remained stable.

The soft drink industry in India is categorized on the basis of carbonated and non
carbonated drinks. The carbonated drinks include flavors like cola, lemon and orange and
the non carbonated drinks segment includes mostly mango flavors. The non carbonated
segment includes fruit juices and squashes. The Top Soft Drink Brands in India are Coca-
Cola, Pepsi and Thumps Up. The other popular soft drink brands in India include Fanta,
Mirinda7Up, Sprite Limca etc. In order to cater to all the segments of the society these top
soft drink brands are available in numerous sizes. Starting from the age old 300 ml glass
bottles to the 200 ml ones to the recently launched 500 ml and 1litre plastic bottles soft drinks
are available in almost every size desired by the consumer. The carbonated drinks account for
almost 80% of the total sales of the soft drinks market in India.

Soft drinks do not only rule the urban markets they have successfully managed to penetrate
the rural areas as well. Rural areas account for almost 75% sales of Pet bottles whereas the
sales of 300 ml and 200ml bottles are higher in the rural areas.

Based on consumption patterns the soft drink market in India is classified into two segments.
The first is on premise which means the place where the soft drink was bought and
consumed. This includes places like railway stations, stand alone shops, restaurants and
cinemas. The other one being In-House consumption which means soft drinks purchased
and consumed at home. However in India the former beats the latter hollow. Outdoor
consumption accounts for almost 80% of the total sales of soft drinks and indoor
consumption accounts for the remaining 20% of the sales of the soft drinks market.

However the soft drinks market in India is still in its nascent stage as compared to countries
like the USA. According to a report published in 2000 the per capita consumption of soft
drinks in India was 5 bottles annually as compared to USA whose per capita consumption per
annum stood at 800 bottles. Delhi happens to be the highest soft drink consuming region in
India.

Capturing the market is the main issue facing any company and when it comes to Beverage
market, it becomes more intense because there are just two players and they are fighting
strongly to capture each others market and don't have any other option.
Both Coke and Pepsi are trying to gain market share in this beverage market, which is valued
at over $30 billion a year. Just how this is done in such a competitive market is the
underlying issue.

The facts are that each company is coming up with new products and ideas in order to
increase their market share. Pepsi has always taken the lead in developing new products, but
Coke soon learned their lesson and started to do the same. Coke hired marketing executives
with good track records (98). Coke also implemented cross training of managers so it would
be more difficult for cliques to form within the company

The creativity and effectiveness of each company's marketing strategy will ultimately
determine the winner with respect to sales, profits, and customer loyalty.

These two companies are constructing new ways to sell Coke and Pepsi, but they are also
thinking of ways in which to increase market share in other beverage categories. Although
the goals of both companies are exactly the same, the two companies rely on somewhat
different marketing strategies.

Pepsi has always taken more risks, acted rapidly, and was always developing new advertising
ideas. Both companies have also relied on finding new markets, especially in foreign
countries. In the foreign markets, Coke has been more successful than Pepsi. For example, in
Eastern Europe, Pepsi has relied on a barter system that proved to fail. However, in certain
countries that allow direct comparison, Pepsi has beat Coke. In foreign markets, both
companies have followed the marketing concept by offering products that meet consumer
needs in order to gain market share. For instance, in certain countries, consumers wanted a
soft drink that was low in sugar, yet did not have a diet taste or image. Pepsi responded by
developing Pepsi Max.

The next step is to take fast action to develop a product that meets the requirements for that
particular region. Both companies cannot just sell one product; if they do they will not
succeed. They have to always be creating and updating their marketing plans and products.
The companies must be willing to accommodate their “target markets”.

Gaining market share occurs when a company stays one-step ahead of the competition by
knowing what the consumer wants.

Applying Porter’s Five Forces to the soft drink industry:

1. A fierce competition exists among very few players: - Duopoly industry - Intense rivalry
between Coke and Pepsi.

2. The threat of substitutes is reduced by the expansion of products portfolio: - Many


alternative beverages e.g. juice, tea.

3. Suppliers have less bargaining power: - Many substitutes for sugar and packaging e.g.
sugar - corn syrup, sweeteners packaging - glass, plastic, metal cans.
4. Different levels of bargaining power exist among the groups of buyers: - Vending
Machine – no buyer bargaining power - Fast Food chain – more bargaining power

5. Strong barriers to new entrants: - Amount of capital investment require - Exclusive


territories in distribution channel - The access to retail channel stores.

Diagram of Porter's 5 Forces

SUPPLIER POWER
Supplier concentration
Importance of volume to supplier
Differentiation of inputs
Impact of inputs on cost or differentiation
Switching costs of firms in the industry
Presence of substitute inputs
Threat of forward integration
Cost relative to total purchases in industry

BARRIERS
TO ENTRY
Absolute cost advantages
Proprietary learning curve
THREAT OF
Access to inputs
SUBSTITUTES
Government policy
-Switching costs
Economies of scale
-Buyer inclination to substitute
Capital requirements
-Relative price performance of
Brand identity
substitutes
Switching costs
Access to distribution
Expected retaliation
Proprietary products

BUYER POWER DEGREE OF RIVALRY


Bargaining leverage -Exit barriers
Buyer volume -Industry concentration ratio
Buyer information -Fixed costs/Value added
Brand identity -Industry growth
Price sensitivity -Intermittent overcapacity
Threat of backward integration -Product differences
Product differentiation -Switching costs
Buyer concentration vs. industry -Brand identity
Substitutes available -Diversity of rivals
Buyers' incentives -Corporate stakes
THE COCA-COLA COMPANY- AN OVERVIEW

The Coca-Cola Company is a beverage retailer, manufacturer and marketer of non-alcoholic


beverage concentrates and syrups. The company is best known for its flagship product Coca-
Cola, invented by pharmacist John Stith Pemberton in 1886. The Coca-Cola formula and
brand was bought in 1889 by Asa Candler who incorporated The Coca-Cola Company in
1892. Besides its namesake Coca-Cola beverage, Coca-Cola currently offers more than 500
brands in over 200 countries or territories and serves 1.6 billion servings each day.

The company operates a franchised distribution system dating from 1889 where The Coca-
Cola Company only produces syrup concentrate which is then sold to various bottlers
throughout the world who hold an exclusive territory. The Coca-Cola Company owns its
anchor bottler in North America, Coca-Cola Refreshments.

The Coca-Cola Company is headquartered in Atlanta, Georgia. Its stock is listed on the
NYSE and is part of DJIA, S&P 500 Index, the Russell 1000 Index and the Russell 1000
Growth Stock Index. Its current chairman and CEO is Muhtar Kent.
One of the Coca-Cola Company's headquarters buildings in
Atlanta

HISTORY:

The Coca-Cola Company was originally established in 1892 as the J. S. Pemberton Medicine
Company, a co-partnership between Dr. John Stith Pemberton and Ed Holland. The company
was formed to sell three main products: Pemberton's French Wine Cola (later known as
Coca-Cola), Pemberton's Indian Queen Hair Dye, and Pemberton's Globe Flower Cough
Syrup.

In 1894, the company became a stock company and the name was changed to Pemberton
Chemical Company. The new president was D. D. Doe while Ed Holland became the new
Vice-President. Pemberton stayed on as the superintendent. The company's factory was
located at No. 107, Marietta St. Three years later, the company was again changed to
Pemberton Medicine Company, another co-partnership, this time between Pemberton, A. O.
Murphy, E. H. Bloodworth, and J. C. Mayfield.

Finally in October 1898, the company received a charter with an authorized capital of
$50,000.The charter became official on January 15, 1899. By this time, the company had
expanded its offerings to include Pemberton's Orange and Lemon Elixir.

During World War II, the company let Coca Cola GmbH run its business in Nazi Germany
where it is said to have employed forced labour.

MISSION, VISION & VALUES:

The world is changing all around us. To continue to thrive as a business over the next ten
years and beyond, we must look ahead, understand the trends and forces that will shape our
business in the future and move swiftly to prepare for what's to come. We must get ready for
tomorrow today. That's what our 2020 Vision is all about. It creates a long-term destination
for our business and provides us with a "Roadmap" for winning together with our bottling
partners.
 Our Mission

At the Coca-Cola company we strive to refresh the world, inspire moments of


optimism and happiness, create value and make a difference.

Our Roadmap starts with our mission, which is enduring. It declares our purpose as a
company and serves as the standard against which we weigh our actions and decisions.

 To refresh the world...


 To inspire moments of optimism and happiness...
 To create value and make a difference.

 Our Vision

Our vision serves as the framework for our Roadmap and guides every aspect of our
business by describing what we need to accomplish in order to continue achieving
sustainable, quality growth.

 People: Be a great place to work where people are inspired to be the best they can be.
 Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate
and satisfy people's desires and needs.
 Partners: Nurture a winning network of customers and suppliers, together we create
mutual, enduring value.
 Planet: Be a responsible citizen that makes a difference by helping build and support
sustainable communities.
 Profit: Maximize long-term return to shareowners while being mindful of our overall
responsibilities.
 Productivity: Be a highly effective, lean and fast-moving organization.

 Our Winning Culture

Our Winning Culture defines the attitudes and behaviors that will be required of us to
make our 2020 Vision a reality.

 Live Our Values

Our values serve as a compass for our actions and describe how we behave in the world.

 Leadership: The courage to shape a better future


 Collaboration: Leverage collective genius
 Integrity: Be real
 Accountability: If it is to be, it's up to me
 Passion: Committed in heart and mind
 Diversity: As inclusive as our brands
 Quality: What we do, we do well

 Focus on the Market

 Focus on needs of our consumers, customers and franchise partners


 Get out into the market and listen, observe and learn
 Possess a world view
 Focus on execution in the marketplace every day
 Be insatiably curious

 Work Smart

 Act with urgency


 Remain responsive to change
 Have the courage to change course when needed
 Remain constructively discontent
 Work efficiently

 Act Like Owners

 Be accountable for our actions and inactions


 Steward system assets and focus on building value
 Reward our people for taking risks and finding better ways to solve problems
 Learn from our outcomes -- what worked and what didn’t

 Be the Brand

 Inspire creativity, passion, optimism and fun

ACQUISITIONS:

The company's recent attempt to buy a Chinese juice maker was foiled when China rejected
its $4.2 billion bid for the Huiyuan Juice Group on the grounds that it would be a virtual
monopoly. Nationalism was also thought to be a reason for aborting the deal. Rumours
speculated that an American rejection of a bid for UNOCAL by a partly state-owned oil
company played a part in the rejection.

However, the company has a long history of acquisitions. Coca-Cola acquired Minute Maid
in 1960. Coca-Cola acquired the Indian cola brand Thums Up in 1993. It acquired Barq's in
1995. In 2001, it acquired the Odwalla brand of fruit juices, smoothies and bars for $181
million. In 2007, it acquired Fuze Beverage from founder Lance Collins and Castanea
Partners for an estimated $250 million.

REVENUE:

The Coca-Cola Company's Minute Maid group North America offices


in Sugar Land Town Square, Sugar Land, Texas, United States
According to the 2005 Annual Report, the company sells beverage products in more than 200
countries. The report further states that of the more than 50 billion beverage servings of all
types consumed worldwide every day, beverages bearing the trademarks owned by or
licensed to Coca-Cola account for approximately 1.5 billion (the latest figure in 2010 shows
that now they serve 1.6 billion drinks everyday). Of these, beverages bearing the trademark
"Coca-Cola" or "Coke" accounted for approximately 78% of the Company's total gallon
sales.

Also according to the 2007 Annual Report, Coca-Cola had gallon sales distributed as follows:

 43% in the United States


 37% in Mexico, India, Brazil, Japan and the People's Republic of China
 20% spread throughout the rest of the world

In 2010 it was announced that Coca-Cola had become the first brand to top £1 billion in
annual UK grocery sales.

LOBBYING:

In the U.S., Coca-Cola is a major lobbying force working to gain favorable legislation for the
beverage industry. In both 2005 and 2006, it spent $1 million each year on lobbying. In 2007
that increased to $1.7 million, and by 2008, to $2.5 million. In 2009, total lobbying expenses
jumped to $4.5 million, or nearly double the previous year. Much of the increased lobbying
expenses are due to the industry’s fight against increased taxes on soft drinks and other
sweetened beverages. For 2009, Coca-Cola has 38 lobbyists at 7 different firms lobbying on
its behalf.

BOTTLERS:

In general, The Coca-Cola Company (TCCC) and/or subsidiaries only produces (or produce)
syrup concentrate which is then sold to various bottlers throughout the world who hold a
Coca-Cola franchise. Coca-Cola bottlers, who hold territorially exclusive contracts with the
company, produce the finished product in cans and bottles from the concentrate in
combination with filtered water and sweeteners. The bottlers then sell, distribute and
merchandise the resulting Coca-Cola product to retail stores, vending machines, restaurants
and food service distributors.

One notable exception to this general relationship between TCCC and bottlers is fountain
syrups in the United States, where TCCC bypasses bottlers and is responsible for the
manufacture and sale of fountain syrups directly to authorized fountain wholesalers and some
fountain retailers.

1996-2002 Chevrolet Express wagon from The Coca-Cola Company.


Houston Coca-Cola Bottling Company

CRITICISM:

The Coca-Cola Company has been involved in a number of crime controversies and lawsuits
related to its relationship with human rights violations and other alleged unethical practices.

A number of lawsuits have been issued in relation to its allegedly monopolistic and
discriminatory practices, some of which have been dismissed, some of which have caused
The Coca-Cola Company to change its business practices, and some of which have been
settled out of court. It has also been involved in a discrimination case. There have been
continuing criticisms regarding the Coca-Cola Company's relation to the Middle East and
U.S. foreign policy.

An issue with pesticides in groundwater in 2003 led to problems for the company when an
Indian NGO, Centre for Science and Environment, announced that it had found cancer
causing chemicals in Coca-Cola as well as other soft drinks produced by the company, at
levels 30 times that considered safe by the European Economic Commission. This caused an
11 percent drop in Indian Coca-Cola sales. The Indian Health Minister said the CSE tests
were inaccurate, and said that the government's tests found pesticide levels within India's
standards but above EU standards. The UK-based Central Science Laboratory, commissioned
by Coke, found its products met EU standards in 2006. Coke and the University of Michigan
commissioned an independent study of its bottling plants by The Energy and Resources
Institute (TERI), which reported in 2008 no unsafe chemicals in the water supply, though it
criticized Coke for the impact of its water usage on local supply.

The company has been criticised on a number of environmental issues. Critics claim that the
company's overuse of local water supplies in some locations has led to severe shortages for
regional farmers and the forced closure of some plants. Packaging used in Coca-Cola's
products have a significant environmental impact. However, the company strongly opposes
attempts to introduce mechanisms such as container deposit legislation.

There are charges that the Coca-Cola Company was involved in the violent repression of a
union at several of its bottling plants in Colombia, South America. As of August 2005, when
PBS's Frontline ran a story on the controversy, Coca-Cola strenuously denied all allegations
of union-busting and murder of union leaders. Shareholders and U.S. college have boycotted
Coca-Cola to try to put pressure on the company to approve a full-scale, independent
investigation of the charges.

On 10 December 2008, the US Food and Drug Administration (FDA) wrote to Mr. Muhtar
Kent, President and Chief Executive Officer, to warn him that the FDA had concluded that
Coca-Cola's product Diet Coke Plus 20 FL OZ was is in violation of the Federal Food, Drug,
and Cosmetic Act. During an interview with Reuters, the Coca Cola company's spokesman,
Scot Williams, stated, "This does not involve any health or safety issues, and we believe the
label on Diet Coke Plus complies with FDA's policies and regulations."

In January 2009, the US consumer group the Center for Science in the Public Interest filed a
class-action lawsuit against Coca-Cola. The lawsuit was in regards to claims made, along
with the company's flavors, of Vitamin Water. Claims say that the 33 grams of sugar are
more harmful than the vitamins and other additives are helpful. Coca-Cola insists the suit is
"ridiculous."

PRODUCTS AND BRANDS:

The Coca-Cola Company offers more than 500 brands in over 200 countries, besides its
namesake Coca-Cola beverage.

Tab was Coca-Cola's first attempt to develop a diet soft drink, using saccharin as a sugar
substitute. Introduced in 1963, the product is still sold today, however its sales have dwindled
since the introduction of Diet Coke.

The Coca-Cola Company also produces a number of other soft drinks including Fanta
(introduced circa 1941) and Sprite. Fanta's origins date back to World War II when Max
Keith, who managed Coca-Cola's operations in Germany during the war, wanted to make
money from Nazi Germany but did not want the negative publicity. Keith resorted to
producing a different soft drink, Fanta, which proved to be a hit, and when Coke took over
again after the war, it adopted the Fanta brand as well. The German Fanta Klare Zitrone
("Clear Lemon Fanta") variety became Sprite, another of the company's bestsellers and its
response to 7 Up.

Coca-Cola South Africa also released Valpre Bottled "still" and "sparkling" water.

During the 1990s, the company responded to the growing consumer interest in healthy
beverages by introducing several new non-carbonated beverage brands. These included
Minute Maid Juices to Go, Powerade sports beverage, flavored tea Nestea (in a joint venture
with Nestle), Fruitopia fruit drink and Dasani water, among others. In 2001, Minute Maid
division launched the Simply Orange brand of juices including orange juice.

In 2004, perhaps in response to the burgeoning popularity of low-carbohydrate diets such as


the Atkins Diet, Coca-Cola announced its intention to develop and sell a low-carbohydrate
alternative to Coke Classic, dubbed C2 Cola. C2 contains a mix of high fructose corn syrup,
aspartame, sucralose, and Acesulfame potassium. C2 is designed to more closely emulate the
taste of Coca-Cola Classic. Even with less than half of the food energy and carbohydrates of
standard soft drinks, C2 is not a replacement for zero-calorie soft drinks such as Diet Coke.
C2 went on sale in the U.S. on June 11, 2004, and in Canada in August 2004. C2's future is
uncertain due to disappointing sales.

Coca-Cola is the best-selling soft drink in most countries. While the Middle East is one of the
only regions in the world where Coca-Cola is not the number one soda drink, Coca-Cola
nonetheless holds almost 25% marketshare (to Pepsi's 75%) and had double-digit growth in
2003. Similarly, in Scotland, where the locally produced Irn-Bru was once more popular,
2005 figures show that both Coca-Cola and Diet Coke now outsell Irn-Bru. In Peru, the native
Inca Kola has been more popular than Coca-Cola, which prompted Coca-Cola to enter in
negotiations with the soft drink's company and buy 50% of its stakes. In Japan, the best
selling soft drink is not cola, as (canned) tea and coffee are more popular. As such, the Coca-
Cola Company's best selling brand there is not Coca-Cola, but Georgia.

Some claim Coke is less popular in India due to suspicions regarding the health standards of
the drink.

On July 6, 2006, a Coca-Cola employee and two other people were arrested and charged with
trying to sell trade secrets information to the soft drink maker's competitor, PepsiCo for $1.5
million. The recipe for Coca-Cola, perhaps the company's most closely guarded secret, was
never in jeopardy. Instead, the information was related to a new beverage in development.
Coca-Cola executives verified that the documents were valid and proprietary. At least one
glass vial containing a sample of a new drink was offered for sale, court documents said. The
conspiracy was revealed by PepsiCo, which notified the authorities when they were
approached by the conspirators.

The company announced a new "negative calorie" green tea drink, Enviga, in 2006, along
with trying coffee retail concepts Far Coast and Chaqwa.

On May 25, 2007, Coca-Cola announced it would purchase Glaceau, a maker of flavored
vitamin-enhanced drinks (vitamin water), flavored waters, and energy drinks, for $4.1 billion
in cash.

On September 3, 2008, Coca-Cola announced its intention to make cash offers to purchase
China Huiyuan Juice Group Limited (which has a 42% share of the Chinese pure fruit juice
market) for US$2.4bn (HK$12.20 per share). China's ministry of commerce blocked the deal
on March 18, 2009, arguing that the deal would hurt small local juice companies, could have
pushed up juice market prices and limited consumers’ choices.

In October 2009, Coca-Cola revealed its new 90-calorie mini can that holds 7.5 fluid ounces.
The first shipments are expected to reach the New York City and Washington D.C. markets
in December 2009 and nationwide by March 2010.

Cola-Cola operates a soft drink themed tourist attraction in downtown Atlanta, Ga; the
"World of Coca-Cola" is a multi-storied exhibition of the many flavors sold by the company
as well as a museum to the history of the company.
COCA-COLA ENTRY IN INDIA

Coca- Cola was the 1st international soft drinks brand to enter India in early 1970s.

Beginning in 1886, when a tumultuous, inventive, clamorous and neurotic new America got a
taste of a “nerve tonic” invented by an obsessive chemist in the pursuit of the perfect
medicine, to late 1890’s when a worthy adversary was born, and to the present; change,
aggression and controversy have been the order of the day. That “nerve tonic” was Coca-
Cola, the obsessive chemist John Pemberton and the worthy adversary Pepsi and the
adversity has not decreased an iota even after 100 years.

Indian Soft Drinks Market: 1970’s and early 80’s—the entry and exit of Coke
India has proved to be perhaps the toughest battle ground for the Cola giants. Coca-Cola was
the 1st international soft drinks brand to enter India in early 1970’s. Indian market was
dominated by domestic brands, with Limca being the largest selling brand. Cola was the
largest selling flavor with market share of 40%, Lemon drinks 31% and orange drinks only
19%.

Up till 1977, Coca-cola was the leading soft drink brand in India. But due to norms set by the
Foreign Exchange Regulation Act (FERA), Coca-Cola left India and did not return till 1993
after a 16 year absence from the Indian beverage market. FERA needed Coca-Cola to reveal
its secret concentrate formula as well as reduce its equity stake which was not acceptable.

Pure drinks, Delhi launched Campa-Cola, to take advantage of Coke’s exit and by the end of
70’s, was the only Cola drink in the Indian market. In 1980, Parle, another major Indian
player launched ThumsUp, the drink which till date is most popular soft-drink in India. Pure
Drinks strongly objected to ThumsUp being called a “soft” drink as it felt its taste is too
strong. For over a decade, Parle led the Indian soft-drinks market, with its market share
reaching a peak of 70% in1990.

Re-entry of Coca-Cola in 1993- On the 26th of October 1993, Coca-Cola re-entered the
Indian market having acquired some of the leading Indian soft drink brands from Parle,
namely Thums-Up, Maaza, Limca, Goldspot & Citra. These brands joined Coke’s portfolio
of international brands i.e. Coca-Cola, Sprite, Fanta, Schweppes as Coca-Cola India took
control of the top soft drink brands in India from the very beginning. From 1993 to 2003,
company invested US $ 1 billion in India.
BRANDS OF COCA-COLA IN INDIA

There are both carbonated and non- carbonated brands launched in India by Coca-Cola.

In this term paper, we will talk with reference with the Coca- Cola, also known as ‘Coke’.
COCA-COLA

It is the world’s favourite drink. The world’s most valuable brand. The most recognizable
word across the world across the world after OK.

Coca- Cola has a truly remarkable heritage. From a humble beginning in 1886, it is now the
flagship brand of the largest manufacturer, marketer and distributor of non- alcoholic
beverages in the world.

In India, Coca- Cola was the leading soft- drink till 1977 when govt. policies necessitated its
departure. Coca – Cola made its return to the country in 1993 and made significant
investments to ensure that the beverage is available to more and more people, even in the
remote and inaccessible parts of the nation.

Coca-Cola is a carbonated soft drink sold in the stores, restaurants, and vending machines of
more than 200 countries. It is produced by The Coca-Cola Company of Atlanta, Georgia, and
is often referred to simply as Coke (a registered trademark of The Coca-Cola Company in the
United States since March 27, 1944). Originally intended as a patent medicine when it was
invented in the late 19th century by John Pemberton, Coca-Cola was bought out by
businessman Asa Griggs Candler, whose marketing tactics led Coke to its dominance of the
world soft-drink market throughout the 20th century.

The company produces concentrate, which is then sold to licensed Coca-Cola bottlers
throughout the world. The bottlers, who hold territorially exclusive contracts with the
company, produce finished product in cans and bottles from the concentrate in combination
with filtered water and sweeteners. The bottlers then sell, distribute and merchandise Coca-
Cola to retail stores and vending machines. Such bottlers include Coca-Cola Enterprises,
which is the largest single Coca-Cola bottler in North America and western Europe. The
Coca-Cola Company also sells concentrate for soda fountains to major restaurants and food
service distributors.

The Coca-Cola Company has, on occasion, introduced other cola drinks under the Coke
brand name. The most common of these is Diet Coke, with others including Caffeine-Free
Coca-Cola, Diet Coke Caffeine-Free, Coca-Cola Cherry, Coca-Cola Zero, Coca-Cola Vanilla,
and special editions with lemon, lime or coffee.
In response to consumer insistence on a more natural product, the company is in the process
of phasing out E211, or sodium benzoate, the controversial additive used in Diet Coke and
linked to DNA damage in yeast cells and hyperactivity in children. The company has stated
that it plans to remove E211 from its other products, including Sprite and Oasis, as soon as a
satisfactory alternative is found.
THE PEPSICO COMPANY- AN OVERVIEW

PepsiCo, Incorporated is a Fortune 500, American global corporation headquartered in


Purchase, Harrison, New York, with interests in the manufacturing, marketing and
distribution of grain-based snack foods, beverages, and other products. PepsiCo was formed
in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc. PepsiCo has since
expanded from its namesake product Pepsi to a broader range of food and beverage brands,
the largest of which include an acquisition of Tropicana in 1998 and a merger with Quaker
Oats in 2001 - which added the Gatorade brand to its portfolio as well.

As of 2009, 19 of PepsiCo's product lines generated retail sales of more than $1 billion each,
and the company’s products were distributed across more than 200 countries, resulting in
annual net revenues of $43.3 billion. Based on net revenue, PepsiCo is the second largest
food & beverage business in the world. Within North America, PepsiCo is ranked (by net
revenue) as the largest food and beverage business.

Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006, and the
company employed approximately 285,000 people worldwide as of 2010. The company’s
beverage distribution and bottling is conducted by PepsiCo as well as by licensed bottlers in
certain regions. PepsiCo is a SIC 2080 (beverage) company.

HISTORY:

Origin:

The recipe for Pepsi, the soft drink, was first developed in the 1890s by a New Bern, North
Carolina pharmacist and industrialist, Caleb Bradham, who named it "Pepsi-Cola" in 1898.
As the cola developed 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. Ownership of this company traded hands several times
throughout the 1920s and 1930s, and in the early 1960s its product line expanded with the
creation of Diet Pepsi and Mountain Dew.

Separately, the Frito Company and H.W. Lay & Company - two American potato and corn
chip snack manufacturers - began working together in 1945 with a licensing agreement
allowing H.W. Lay to distribute Fritos in the Southeastern United States. The companies
merged to become Frito-Lay, Inc. in 1961.

In 1965, the Pepsi-Cola Company merged with Frito-Lay, Inc. to become PepsiCo, Inc., the
company it is known as at present. At the time of its foundation, PepsiCo was incorporated in
the state of Delaware and headquartered in Manhattan, New York. The company's
headquarters were relocated to its still-current location of Purchase, New York in 1970, and
in 1986 PepsiCo was reincorporated in the state of North Carolina.

ACQUISITIONS AND DIVESTMENTS:

Between the late-1970s and the mid-1990s, PepsiCo expanded via acquisition of businesses
outside of its core focus of packaged food and beverage brands; however it exited these non-
core business lines largely in 1997, selling some, and spinning off others into a new company
named Tricon Global Restaurants, which later became known as Yum! Brands, Inc.. PepsiCo
also previously owned several other brands that it later sold, in order to allow it to return
focus to its primary snack food and beverage lines, according to investment analysts reporting
on the divestments in 1997. Brands formerly (no longer) owned by PepsiCo include: Pizza
Hut, Taco Bell, KFC, Hot 'n Now, East Side Mario's, D'Angelo Sandwich Shops, Chevys
Fresh Mex, California Pizza Kitchen, Stolichnaya (via licensed agreement), Wilson Sporting
Goods and North American Van Lines.

The divestments concluding in 2007 were followed by multiple large-scale acquisitions, as


PepsiCo began to extend its operations beyond soft drinks and snack foods into other lines of
foods and beverages. PepsiCo purchased the orange juice company Tropicana Products in
1998, and merged with Quaker Oats Company in 2001, adding with it the Gatorade sports
drink line and other Quaker Oats brands such as Chewy Granola Bars and Aunt Jemima,
among others.

In August 2009, PepsiCo made a $7 billion offer to acquire the two largest bottlers of its
products in North America: Pepsi Bottling Group and PepsiAmericas. In 2010 this
acquisition was completed, resulting in the formation of a new wholly owned subsidiary of
PepsiCo, Pepsi Beverages Company. Also in late 2010, the company made its largest
international acquisition when it purchased a majority stake in Wimm-Bill-Dann Foods - a
Russian food company which produces milk, yogurt, fruit juices and dairy products.

PRODUCTS AND BRANDS:

PepsiCo’s product mix as of 2009 (based on worldwide net revenue) consists of 63 percent
foods, and 37 percent beverages. On a worldwide basis, the company’s current products lines
include several hundred brands that in 2009 were estimated to have generated approximately
$108 billion in cumulative annual retail sales.

The primary identifier of companies' main brands within the food and beverage industry are
those which generate annual sales exceeding $1 billion, and 19 of PepsiCo's brands met this
description as of 2009: Pepsi-Cola, Mountain Dew, Lay's, Gatorade, Tropicana, 7Up,
Doritos, Lipton Teas, Quaker Foods, Cheetos, Mirinda, Ruffles, Aquafina, Pepsi Max,
Tostitos, Sierra Mist, Fritos, and Walker's.

AREAS OF BUSINESS:

The structure of PepsiCo's global operations has shifted multiple times in its history as a
result of international expansion, and as of 2010 it is separated into four main divisions:
PepsiCo Americas Foods, PepsiCo Americas Beverages, PepsiCo Europe, and PepsiCo Asia,
Middle East and Africa. As of 2009, 71 percent of the company’s net revenues came from
North and South America, 16 percent from Europe and 13 percent from Asia, the Middle East
and Africa.

CORPORATE GOVERNANCE:

Headquartered in Purchase, New York, with research and development headquarters in


Valhalla, New York, PepsiCo’s Chairman and CEO is Indra Nooyi. The board of directors is
composed of eleven outside directors as of 2010, including Ray Lee Hunt, Shona L. Brown,
Victor Dzau, Arthur C. Martinez, Sharon Percy Rockefeller, Daniel Vasella, Dina Dublon,
Ian M. Cook, Alberto Ibargüen, James J. Schiro and Lloyd G. Trotter. Former top executives
at PepsiCo include Steven Reinemund, Roger Enrico, D. Wayne Calloway, John Sculley,
Michael H. Jordan, Donald M. Kendall, Christopher A. Sinclair and Alfred Steele.

On October 1, 2006, former Chief Financial Officer and President Indra Nooyi replaced
Steve Reinemund as Chief Executive Officer. Nooyi remained as the corporation's president,
and became Chairman of the Board in May 2007, later (in 2010) being named #1 on Fortune's
list of the "50 Most Powerful Women"and #6 on Forbes' list of the "World's 100 Most
Powerful Women".PepsiCo received a 100 percent rating on the Corporate Equality
Indexreleased by the LGBT-advocate group Human Rights Campaign starting in 2004, the
third year of the report.

HEADQUARTERS:

PepsiCo headquarters

The PepsiCo headquarters are located in Purchase, Harrison, New York. It was one of the last
architectural works by Edward Durell Stone. It consists of seven three story buildings. Each
building is connected to its neighbor through a corner. The property includes a sculpture
garden with 45 sculptures. Works include those of Alexander Calder, Henry Moore, and
Auguste Rodin. Westchester Magazine stated "The buildings’ square blocks rise from the
ground into low, inverted ziggurats, with each of the three floors having strips of dark
windows; patterned pre-cast concrete panels add texture to the exterior surfaces." In 2010 the
magazine ranked the building as one of the ten most beautiful buildings in Westchester
County.

At one time PepsiCo had its headquarters in 500 Park Avenue in Midtown Manhattan, New
York City. In 1956 Pepsico paid $2 million for the original building. PepsiCo built the new
500 Park Avenue in 1960. In 1966 Mayor of New York City John Lindsay started a private
campaign to convince PepsiCo to remain in New York City. In 1967 PepsiCo announced that
it was moving to 112 acres (45 ha) of the Blind Brook Polo Club in Westchester County.
After PepsiCo left the Manhattan building, it became known as the Olivetti Building.
PEPSICO ENTRY IN INDIA

PepsiCo entered India in 1989 and has grown to become the country’s largest selling food
and beverage companies. PepsiCo India and its partners have invested more than U.S.$700
million since the company was established in the country in 1989.

Some of the facts about Pespsico are:

• Revenues in 2007 is more than $39 billion.

• There are 37 bottling plants in India, of which 16 are company owned and 21 are
franchisee owned.

• PepsiCo’s Frito Lay snack division has 3 state of the art plants.

• It has more than 185,000 employees across the world.

• In India, PepsiCo provides direct employment to 4,000 people and indirect


employment to 60,000 people including suppliers and distributors.

• CEO : Mr.Sanjeev Chadha.

• India Headquarters : Gurgaon.

PepsiCo entered India in 1989 and has grown to become the country’s largest selling food
and Beverage Company. One of the largest multinational investors in the country, PepsiCo
has established a business which aims to serve the long term dynamic needs of consumers in
India.

PepsiCo nourishes consumers with a range of products from treats to healthy eats that deliver
joy as well as nutrition and always, good taste. PepsiCo India’s expansive portfolio includes
iconic refreshment beverages Pepsi, 7 UP, Mirinda and Mountain Dew, in addition to low
calorie options such as Diet Pepsi, hydrating and nutritional beverages such as Aquafina
drinking water, isotonic sports drinks - Gatorade, Tropicana 100% fruit juices, and juice
based drinks – Tropicana Nectars, Tropicana Twister and Slice, non-carbonated beverage and
a new innovation Nimbooz by 7Up. Local brands – Lehar Evervess Soda, Dukes Lemonade
and Mangola add to the diverse range of brands.

PepsiCo’s foods company, Frito-Lay, is the leader in the branded salty snack market and all
Frito Lay products are free of trans-fat and MSG. It manufactures Lay’s Potato Chips,
Cheetos extruded snacks, Uncle Chipps and traditional snacks under the Kurkure and Lehar
brands and the recently launched ‘Aliva’ savoury crackers. The company’s high fibre
breakfast cereal, Quaker Oats, and low fat and roasted snack options enhance the healthful
choices available to consumers. Frito Lay’s core products, Lay’s, Kurkure, Uncle Chipps and
Cheetos are cooked in Rice Bran Oil to significantly reduce saturated fats and all of its
products contain voluntary nutritional labeling on their packets.

The group has built an expansive beverage and foods business. To support its operations,
PepsiCo has 36 bottling plants in India, of which 13 are company owned and 23 are
franchisee owned. In addition to this, PepsiCo’s Frito Lay foods division has 3 state-of-the-
art plants. PepsiCo’s business is based on its sustainability vision of making tomorrow better
than today. PepsiCo’s commitment to living by this vision every day is visible in its
contribution to the country, consumers and farmers.

ESTABLISHMENT:

PepsiCo established its business operations in India in 1989 and has grown to become one of
the country’s leading food and beverage companies. One of the largest multinational
investors in the country, PepsiCo has established a business which aims to serve the long
term dynamic needs of consumers in India.

INVESTMENT:

PepsiCo India and its partners have invested more than USD1 billion since the company was
established in the country.

EMPLOYMENT:

PepsiCo India provides direct and indirect employment to 150,000 people including suppliers
and distributors.

PEPSICO BOILERPLATE:

PepsiCo is one of the world’s largest food and beverage companies, with revenues of nearly
$60 billion. PepsiCo offers the world’s largest portfolio of billion-dollar food and beverage
brands, including 19 different product lines that each generates more than $1 billion in annual
retail sales. Our main business - Frito-Lay, Quaker, Pepsi-Cola, Tropicana and Gatorade –
also make hundreds of other nourishing, tasty foods and drinks that bring joy to our
consumers in more than 200 countries.

PepsiCo’s people are united by our unique commitment to sustainable growth, called
Performance with Purpose. By dedicating ourselves to offering a broad array of choices for
healthy, convenient and fun nourishment, reducing our environmental impact, and fostering a
diverse and inclusive workplace culture, PepsiCo balances strong financial returns with
giving back to our communities worldwide.

BRAND FACTS:

PepsiCo nourishes consumers with a range of products from tasty treats to healthy eats that
deliver enjoyment, nutrition, convenience as well as affordability.

BEVERAGES:
PepsiCo India’s expansive portfolio includes iconic refreshment beverages Pepsi, 7 UP,
Nimbooz, Mirinda and Mountain Dew, in addition to low calorie options such as Diet Pepsi,
hydrating and nutritional beverages such as Aquafina drinking water, isotonic sports drinks -
Gatorade, Tropicana100% fruit juices, and juice based drinks – Tropicana Nectars, Tropicana
Twister and Slice. Local brands – Lehar Evervess Soda, Dukes Lemonade and Mangola add
to the diverse range of brands.

FOODS:

PepsiCo’s food division, Frito-Lay, is the leader in the branded salty snack market and all
Frito Lay products are free of trans-fat and MSG. It manufactures Lay’s Potato Chips,
Cheetos extruded snacks, Uncle Chipps and traditional snacks under the Kurkure and Lehar
brands. The company’s high fibre breakfast cereal, Quaker Oats, and low fat and roasted
snack options enhance the healthful choices available to consumers. Frito Lay’s core
products, Lay’s, Kurkure, Uncle Chipps and Cheetos are cooked in Rice Bran Oil to
significantly reduce saturated fats and all of its products contain voluntary nutritional labeling
on their packets.

QUICK FACTS:

PepsiCo established its business operations in India in 1989

 Invested more than USD 1 Billion since inception


 Well known and loved global brands that delight and nourish consumers

 It provides direct and indirect employment to 150,000 people in India


 It has more than 36 bottling plants including 13 Company & 23 Franchise owned ones
 3 State-of-the-art food plants in Punjab, Maharashtra and West Bengal

MISSION:

"To be the world's premier consumer products company focussed on convenience food and
beverages. We seek to produce healthy financial rewards to investors as we provide
opportunities for growth and enrichment to our employees, our business partners and the
communities in which we operate. And in everything we do, we strive for honesty, fairness
and integrity."

VISION:

"To build India’s leading total beverage company, delighting consumers by best meeting their
everyday beverage needs, and stakeholders, by delivering performance with purpose, through
our talented people."
BRANDS OF PEPSICO IN INDIA
PEPSI

Pepsi is a carbonated soft drink that is produced and manufactured by PepsiCo. Invented in
1898 and introduced as "Brad's Drink", it was later renamed as Pepsi-Cola on June 16, 1903.

Pepsi was first introduced as "Brad's Drink" in New Bern, North Carolina in 1898 by Caleb
Bradham, who made it at his home where the drink was sold. It was later named Pepsi Cola,
possibly due to the digestive enzyme pepsin and kola nuts used in the recipe. Bradham sought
to create a fountain drink that was delicious and would aid in digestion and boost energy.

In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore to a rented
warehouse. That year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi was sold in
six-ounce bottles, and sales increased to 19,848 gallons. In 1909, automobile race pioneer
Barney Oldfield was the first celebrity to endorse Pepsi-Cola, describing it as "A bully
drink...refreshing, invigorating, a fine bracer before a race." The advertising theme "Delicious
and Healthful" was then used over the next two decades. In 1926, Pepsi received its first logo
redesign since the original design of 1905. In 1929, the logo was changed again.

In 1931, at the depth of the Great Depression, the Pepsi-Cola Company entered bankruptcy -
in large part due to financial losses incurred by speculating on wildly fluctuating sugar prices
as a result of World War I. Assets were sold and Roy C. Megargel bought the Pepsi
trademark. Eight years later, the company went bankrupt again. Pepsi's assets were then
purchased by Charles Guth, the President of Loft Inc. Loft was a candy manufacturer with
retail stores that contained soda fountains. He sought to replace Coca-Cola at his stores'
fountains after Coke refused to give him a discount on syrup. Guth then had Loft's chemists
reformulate the Pepsi-Cola syrup formula.

On three separate occasions between 1922 and 1933, the Coca-Cola Company was offered
the opportunity to purchase the Pepsi-Cola company and it declined on each occasion

PEPSI- PORTER’S 5 FORCES MODEL

Traditional competition:

 Prices of Coca-Cola, local brands


 Market share
 Promotional actions of competition.

New entrants:
 New “look-alike manufacturers

Substitute products:

 Fashionable new drinks, milk drinks, coffee, beer, water, smoothies.

Suppliers:

 Price and availability of ingredients on world market.


 Quality, speed, safety, traceability, flexibility of supply chain.

Buyers/ consumers:

 High as a result of intense competition both among branded and unbranded


products.
 Combined purchase poer of shops, bars and supermarkets.

MARKETING
STRATEGIES
ADOPTED BY PEPSI
& COKE IN SAME
ENVIRONMENT

LATE 70s AND EARLY 80s

The history, the romance, the struggle, the courage, the endurance, the
confidence and the competition characterizes the presence of an industry
which no one in their wildest imagination had dreamt would last so long.
Beginning in 1886, when a tumultuous, inventive, clamorous and neurotic
new America got a taste of a “nerve tonic” invented by an obsessive chemist
in the pursuit of the perfect medicine, to late 1890’s when a worthy
adversary was born, and to the present; change, aggression and controversy
have been the order of the day. That “nerve tonic” was Coca-Cola, the
obsessive chemist John Pemberton and the worthy adversary Pepsi and the
adversity has not decreased an iota even after 100 years.
Indian Soft Drinks Market
1970’s and early 80’s—the entry and exit of Coke
India has proved to be perhaps the toughest battle ground for the Cola
giants. Coca-Cola was the 1st international soft drinks brand to enter India in
early 1970’s. Indian market was dominated by domestic brands, with Limca
being the largest selling brand. Cola was the largest selling flavor with
market share of 40%, Lemon drinks 31% and orange drinks only 19%.

Up till 1977, Coca-cola was the leading soft drink brand in India. But due to
norms set by the Foreign Exchange Regulation Act (FERA), Coca-Cola left
India and did not return till 1993 after a 16 year absence from the Indian
beverage market. FERA needed Coca-Cola to reveal its secret concentrate
formula as well as reduce its equity stake which was not acceptable.

Pure drinks, Delhi launched Campa-Cola, to take advantage of Coke’s exit


and by the end of 70’s, was the only Cola drink in the Indian market. In
1980, Parle, another major Indian player launched ThumsUp, the drink which
till date is most popular soft-drink in India. Pure Drinks strongly objected to
ThumsUp being called a “soft” drink as it felt its taste is too strong. For over
a decade, Parle led the Indian soft-drinks market, with its market share
reaching a peak of 70% in1990.

Late 80’s and early 90’s— Pepsi’s struggle to enter India

Pepsi saw the exit of Coke as a God send opportunity to capture then
estimated 900 crore market of India. India was then a highly regulated
market with International trade constituting only 6% of GDP in 1985. Foreign
trade was subject to import tariffs, export tariffs and quantitative
restrictions. Foreign direct investment (FDI) was restricted by barriers like
upper limit equity participation, restrictions on technology transfer, export
obligations and government approvals. Any foreign investment had a lot of
political sensitivity to it. By the time PepsiCo began its negotiations, the
upper cap for equity holding in Indian companies was 40%. PepsiCo realized
it’ll have to be creative to enter the Indian markets.

Attempt 1: In May 1985, PepsiCo joined hands with the RPG group to form
Agro Product Export Limited. It planned to import Cola concentrate and sell
soft-drinks under the Pepsi label and in return offered to export Juice
Concentrate from Punjab. The government rejected the proposal due to its
using a foreign name and importing the concentrate.
Attempt 2: Pepsi decided to play the Punjab Card by promising to invest
$15 million in Punjab, establish an Agro Research centre (costing Rs 1.55
crores), a potato and grain based processing unit (costing Rs 8 crores) and a
fruit and vegetable processing unit (costing Rs 5 crores). Benefits and
proposal included better market for rice, wheat and fruits in Punjab, creation
of 25000 jobs in Punjab and 25000 more in other areas. In 1988,
government agreed. PepsiCo entered as Lehar Pepsi and by 1991, it was
clear that most of its promises were just on paper.

The company did improved the productivity in India, introduced farmers to


new technology, established agriculture research centers in Jallowal and
Channo (in Punjab) and Nelamangla in Karnataka and invested more capital
than promised (by the year 2000, total investment was Rs 18 billion), but the
picture on many other aspects was gloomy. The planned operations in Punjab
were delayed and as a result, local farmers had to bear a combined loss of
Rs. 2.5 Million. Pepsi paid only 0.75 Rs/Kg of Tomato compared to open
market price of Rs 2/Kg. Employment was provided to only 783 people as
compared to 50,000 promised (although company claimed it to be 26,000
due to direct and indirect operations). It began exporting tea, rice, shrimps,
glass bottles, leather products as against fruits and vegetable products.
There was an even a show-cause notice to Pepsi by the ministry of
commerce. Luckily for PepsiCo, in 1991, the government of India liberated
the economy on grounds of severe foreign exchange crisis and Pepsi was
freed from all the commitments it had made during entry.

"Convincing India that it needs Western junk has not been easy." 1

- A New Internationalist Magazine Article, commenting on Pepsi's struggle to enter India,


in August 1988.

A Letter to Pepsi

Coca-Cola was forced to leave India in 1977, and Fernandes had personally cited this to
Pepsi in his letter when Pepsi was toying around the idea to enter India. It was upto Pepsi to
offer a very good package to the Indian government. In 1988, the New York office of the
President of the multi-billion cola company PepsiCo received a letter from India. The company had
been trying for some time to enter the Indian market - without much success.

The letter was written by George Fernandes (Fernandes), the General Secretary of one of the
country's leading political parties, Janata Dal. He wrote, "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, you have to remember that the same fate awaits you as Coca-Cola." This
development did not seem to be a matter that could be ignored. PepsiCo's arch-rival and the world's
number one cola company, Coca-Cola, had indeed been forced to close operations and leave India in
1977 after the Janata Dal came to power.3 Even in the late 1980s, India had a closed economy and
government intervention in the corporate sector was quite high.

PEPSI- PULL TOWARDS LUCRATIVE INDIAN MARKET

However, multinational companies such as PepsiCo had been eyeing the Indian market for a long
time for a host of reasons. As the major market for PepsiCo, the US, seemed to be reaching
saturation levels, the option to expand on a global scale seemed to have become inevitable for the
company.

India was a lucrative destination since its vast population offered a huge, untapped customer base.
During the late 1980s, the per capita consumption of soft drinks in India was only three bottles per
annum as against 63 and 38 for Egypt and Thailand respectively. Even its neighbor Pakistan boasted
of a per capita soft drink consumption of 13 bottles. PepsiCo was also encouraged by the fact that
increasing urbanization had already familiarized Indians with leading global brands. Given these
circumstances, PepsiCo officials had been involved in hectic lobbying with the Indian government to
obtain permission to begin operations in the country. However, the company could not deny that
many political parties and factions were opposed to its entry into the country. It had therefore
become imperative for PepsiCo to come up with a package attractive enough for the Indian
government.

• The thirst for global presence made Pepsi to venture in India with already inroads
in 150 countries before India.

• The huge consumer base of 850 million in India can never be ignored, in spite of
all the odds

 Due to the fate of Coke in India the market entry had to be prepared carefully.

ISSUES TO CONSIDER:

 Political environment

 Intent of development of local players only

 Opposition to promotion of carbonated drinks

 Fear of invasion of foreign brand

 Legal environment

 Severe restrictions in equity through FERA

 Dispute in relation to ownership of Pepsi brand name( foreign name


not allowed)

 Economic environment

 Closed and Forex starved economy

 Cold drink industry in nascent stage


 Socio cultural environment

 Fear of invasion of MNC culture

 Fear of impact on Health/diet

WHY PUNJAB?

 Punjab boasted a healthy agricultural sector with good crop record in past.
 Punjab being progressive state with larger landside with farmers
 Easy water availability
 High unemployment rate

THE PROMISE THAT HELPED PEPSI ENTER- THE STRATEGIES ADOPTED

In May 1985, PepsiCo had joined hands with one of India's leading business houses, the R P Goenka
(RPG) group, to begin operations in the country. The company, along with the RPG group company
Agro Product Export Ltd., planned to import the cola concentrate and sell soft drinks under the Pepsi
label.

To make its proposal attractive to the Indian government, PepsiCo stated the following:

 It said that the import of cola concentrate would essentially be in return for
exporting juice concentrate from operations to be established in the north Indian
state of Punjab.

 In its proposal submitted to the Ministry of Industrial Development, company sources


said that the objectives of 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.' However, the government rejected
this proposal primarily on two grounds: one, the government did not accept the clause
regarding the import of the cola concentrate and, two, the use of a foreign brand name
(Pepsi) was not allowed as per the regulatory framework.

The association with the RPG group too ended at this juncture. Not willing to sit quietly on
the issue, PepsiCo put forward another proposal to the government a few months later (May,
1986):

 The company knew that the political and social problems that plagued Punjab were an
extremely sensitive issue for India in the 1980s. PepsiCo's decision to link its entry
with the development and welfare of the state was thus a conscious one, aimed at
winning the government over.

 The fact that Punjab boasted a healthy agricultural sector (with good crop yields in the
past) also played a role in PepsiCo's decision. Reportedly, the new proposal gave a lot
of emphasis to the effects of PepsiCo's entry on agriculture and employment in
Punjab (This was a wonderful offer, given the political/social unrest in Punjab in the
1980s). It committed to create 50000 jobs, 25000 will be in Punjab alone.

 The company claimed that it would play a central role in bringing about an
agricultural revolution in the state and would create many employment
opportunities.

 To make its proposal even more lucrative, PepsiCo claimed that these new
employment opportunities would tempt many of the terrorists to return to society

 It will develop the area it have planned to operate in.

 Directing major (75%) investment towards agricultural sector.

 74 percent of the total investment will be in food and agro- processing.


Manufacturing of soft drinks will be limited to only 25 percent.

 PepsiCo will bring advanced technology in food processing and provide thrust by
marketing Indian products abroad.

 State of the art technology would be provided in the fields of food processing and soft
drink manufacturing at no foreign exchange outflow

 50 percent of the total value of production will be exported

 An agro-research centre will be established by PepsiCo in consultation with ICAR


and PAU;
 No foreign brand name will be used for domestic sales;
 The export-import ratio will be 5:1 over 10 years, which means that for every dollar
spends in foreign exchange on this project, the company will ensure an export earning
of 5 dollars for 10 years;
 25 percent of the total fruits and vegetable crops in Punjab will be processed in the
project;
 A substantial increase in government revenue due to consumer market expansion and
tax collection.
 It will boost the image of Indian products in foreign market.

 More focus will be on exports than imports to improvise the balance of payments.

FINALLY PEPSI ENTERED INDIAN MARKET

Finally, in 1988, it entered India, as a 'Lehar Pepsi' brand (remember that funny sketch, who
comes for 7-up these day?) Pepsi's entry into India was even noted by marketing gurus like
Philip Kotler, who said, that Pepsi, apart from using the 4Ps, also used Politics and Public
Opinion in the process. But, did Pepsi keep all of its promise? It didn't, and thankfully, India
liberalized, and Pepsi was partly saved.
But, Pepsi had done many things good for this country. It brought about an amazing increase
in tomato production, through contract farming. It also offered its contract farmers with
advanced equipments free of cost. It also setup an agro-based research center in Punjab and
Karnataka.

Pepsi's Promises - Keep Some, Break Some!

Pepsi began by setting up a fruit and vegetable processing plant at Zahura village in Punjab's
Hoshiarpur district. The plant would focus on processing tomatoes to make tomato paste.
Since the local varieties of tomatoes were found to be of inferior quality, Pepsi imported the
required material for tomato cultivation.

The company entered into agreements with a few big farmers (well-off farmers with large
land holdings) and began growing tomatoes through the contract farming route (though the
agro-climatic profile of Punjab was not exactly suitable for a crop like tomato, Pepsi had
chosen the state because its farmers were progressive, their landholdings were on the larger
side, and water availability was sufficient). Initially, Pepsi had a tough time convincing
farmers to work for the company. Its experts from the US had to interact extensively with the
farmers to explain how they could benefit from working with the company. Another problem,
although a minor one, was regarding financial transactions with the farmers. When the
company insisted on payments by cheque, it found out that as many as 80% of the farmers
did not even have a bank account..!

India Liberalizes - A Boon For Pepsi

In the early 1990s, the Government of India was facing a foreign exchange crisis. The
country was finding it extremely difficult to borrow funds from the international markets due
to a host of problems on the political, economic and social fronts.

Organizations like the International Monetary Fund agreed to help the Indian government
deal with the financial crisis, on condition that it liberalized the Indian economy. As a result,
the government decided to liberalize the economy. The removal of the numerous restrictions
on foreign trade and the increased role of private equity in Indian markets were the two most
prominent features of the government's new economic policy. Pepsi benefited from the
economic changes in many ways. The removal of various restrictions meant that it no longer
had to fulfill many of the commitments it had made at the time of its entry. The government
removed the restrictions that bound Pepsi's investments in the soft drinks business to 25% of
the overall investments and required it to export 50% of its production...

After liberalisation it did the following:

 In 1994, it bought off its partner in venture i.e., Voltas and PAIC.
 Established wholly owned subsidiary PepsiCo Holding India Pvt Ltd.
 Changed name from “Lehar Pepsi” to “Pepsi”.
 Sold off its Tomato Paste Plant in 1995.
 Gradually reduces the contract farming.
 Plastic exports were 67%.
 Till 1997, the agro research was no where.
Pepsi Goes Farming - Finally

Though Pepsi attracted a lot of criticism, many people felt there was a positive side to the
company's entry into India. According to a www.agroindia.org article, Pepsi's tomato farming
project was primarily responsible for increasing India's tomato production.

Production increased from 4.24 million tonnes in 1991-92 to 5.44 million tones in 1995-96.
The company's use of high yielding seeds was regarded as one of the reasons for the increase
in productivity in tomato cultivation during the same period. Commenting on the above issue,
Abhiram Seth, [Seth, the company's Executive Director (Exports and External Affairs)] said,
"When we set up our tomato paste plant in 1989, Punjab's tomato crop was just 28,000
tonnes, whereas our own requirement alone was 40,000 tonnes. Today, the state produces
250,000 tonnes. Per hectare yields, which used to be 16 tonnes, have crossed 50 tonnes."
Pepsi was, however, not as successful in the chili contract farming venture that was started
soon after the tomato venture stabilized...

Doing Business on its Own Terms

The company's contract farming initiatives and its focus on improving Punjab's agricultural
sector seemed to indicate that Pepsi had been working towards fulfilling its pre-entry
commitments. However, the reality was quite different.

In 2000, the company's exports added up to Rs 3 billion. The items exported included not
only processed foods, basmati rice and guar gum , but also soft drink concentrate. Though the
company did not make the figures public, in all probability, the portion of soft drink
concentrate in its exports was much higher than that of any other product. In fact, the
company met the soft drink concentrate requirements of many of its plants worldwide
through its Indian operations. Even by 2000, of its annual requirement of 25,000 tonnes of
potatoes per annum, Pepsi got only 3,000 tonnes from its contract farmers. Given these
figures, it would be interesting to see how it planned to achieve its objectives of meeting its
complete requirement of potatoes through the contract farming route by 2004.

In-short: Post- Establishment Pepsi:

• Commitments: Nothing official about it

• Evidence showed that right from the beginning, Pepsi had no intention of
diversification in Punjab but the real motive was to sell soft drinks.

• It was a tactics played by PepsiCo to get entry in the domestic market of India

• Thus, Pepsi with its strong market instinct and research become the powerful player
of Indian beverages and soft drink industry with implying their funda of
GLOCALISATION.

GLOBAL + LOCALISATION = GLOCALISATION


THUS PEPSI ADOPTD THE 6 Ps: A WONDER MARKETING STRATEGY:

 Product

 Price

 Place

 Promotion

 Politics

 Public Image

POST- LIBERALISATION ERA

Pepsi entered into the Indian beverage market in July 1986 as a joint venture with 2 local
partners- Voltas and Punjab Agro, forming “Pepsi Foods Ltd.” Coca-Cola followed suit in
1990 with a joint venture with Britannia Industries India before creating a 100% owned
company in 1993 and then ultimately aligning with Parle, the leader in the industy. As both
companies would soon discover, “ competing in India requires special knowledge, skills and
local expertise....what works here does not always work there.” The primary barrier to Pepsi
and Coca-Cola entry into the Indian market was its political/ legal environment as a result of
its history. First, despite the liberalisation of the Indian economy in 1991 and introduction o
New Industrial Policy to eliminate barriers, such as bureaucracy and regulation to FDI, India
still had a strong history of protectionism, dating back most recently to its economic policies
following the Gulf War. India’s past promotion of “indigenous availability”.

1. Depicts its affinity towards local products. In fact, the idea of protectionism in
industries where India had a comparative advantage can be seen as early as the 1920s.
Britain and India used “discriminating protection” to ward off German and Belgian
competitors in the steel industry. Due to India’s suspicion on foreign business
stemming from past history, both Pepsi and Coke received alien status upon entry to
the Indian market.
2. The 2 corporations were required to follow many laws, designed as obstacles to
impede foreign business. For example, sales of soft drink concentrate by Pepsi to
local bottlers could not exceed 25% of total sales. Also, foreign businesses were no
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 to buy out Indian bottlers. “this response might
have been acceptable if investment rules in India were clear and unchanging, but this
as not the case during the 90s.” As St. Augustine said, “an unjust law is no law at all.”
Because of the lack of consistency in the legal environment, there was a greater
importance placed on lobbying the politicians. As Coca-Cola soon discovered though,
when there was a change in the oversight of the Foreign Investment Protections
Board, all previous lobbying become useless. Lack of solid institutions gives way to
corruption.

Coke and Pepsi’s Controls:

Due to the external nature o the political and legal environment of operating in India,
much of the problems were out of Coca-Cola and Pepsi’s control. Even if the two were to
have performed a more extensive environmental analysis, many of the problems would
not have been forecasted. Government situations are dynamic and inconsistent where
there is not a strong foundation of law. Thus, Pepsi and Coke focussed on the following
controllable aspects:

1. Price: Coca-Cola reduces prices nationwide by 15-25% to make thm


affordable and easy to get access to. Pepsi introduced returnable glass
bottles for consumers to recoup costs.
2. Product: Coca-Cola and Pepsi launched different product lines to
appeal to the Indian consumer tastes. They started with product lines
that were already available, such as Cola, fuit drinks and carbonated
water. Then, when the market was ready, they launched other lines,
such as bottled water (Coke- Kinley and Pepsi- Aquafina) and clear
lime sodas (Coke- Sprite, Pepsi- 7 Up).
3. Promotion: Both Coca-Cola and Pepsi adapted to the local market
with promotions. They promoted heavily during the Navratri festival.
Pepsi gave away a kilo of Basmati rice with every refill of a case of
Pepsi. This is an effective strategy to blend the old (rice) with the new
(Pepsi). Coke gave away vacations to Goa, a famous resort in India.
Further, they teamed up with influential figures in Indian pop- culture
to promote their products. Pepsi launched an ambitious marketing
campaign sponsoring cricket celebrities and athletes from the World
Cup. Coke launched its Lifestyle Ad Campaign as a method of
building brand loyalty among its target markets. “India A” (18-24 year
old urban youth) and India “B” (rural youth). They used a music
director and an actor to promote the project. Most importantly, they
tried to create a connection between local idioms and their products so
that they would stick. The use of celebrities is powerful marketing tool
across cultures to promote products.
4. Channels of Distribution: production plants and bottling centers were
strategically placed in large cities all around India. More were added as
demand grew, along with new product lines. In Coke’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 into the market.
The political environment in India proved to be very problematic for both PepsiCo and Coca-
Cola when they entered the market. The government has long enforced a protectionist stance
on its economy in order to safeguard the interests of its people. Even with the New Industrial
Policy in 1991 (Pathak 2007), that loosened the grip on foreign businesses entering the
country, PepsiCo and Coca-Cola still had to jump through many hurdles before they could
operate.
For example, PepsiCo was limited to selling at most 25% of total sales of their soft drink
concentrate to local bottlers (Cateora 2007). They were also not allowed to use foreign brand
names on their products, which meant that PepsiCo had to rename their products Lehar Pepsi
and Lehar 7UP. These limitations served to dampen PepsiCo’s advance into the market, as
well as tamper with the ‘product’ element of their marketing mix by getting rid of the brand’s
established name.
Coca-cola on the other hand, was forced by the governmentto relinquish 49% of the
company’s shares in order to purchase the local bottling plants (Cateora 2007). What made it
worst was that at the time the company was pleading with the government to waive the
ruling; there was a change in the bureaucratic in the government that left all past lobbying
efforts in vein. This lack of solid institutions not only makes it hard for companies to manage
the enviroment, but also gives way to corruption.
Unfortunately, even if the two companies had extensively researched the situation and
performed comprehensive environment analysis, they would have not foreseen many of the
problems. This is due to the unstable and unpredictable nature of the political and legal
environment resulting from a lack of a solid foundation of law.
While PepsiCo entered India in 1988, Coca-Cola only managed to properly re-enter the
Indian market in 1993, a whole 5 years after its rival. Both companies’ ventures faced some
strict conditions from the government.

The Coca-Cola Company Releases Test


Results Confirming the Safety of Soft
Drinks in India.
Article from: PR Newswire | August 11, 2006 |

Company States Support for Establishment of Clear Criteria for Pesticide Residues in Soft
Drinks in India

ATLANTA, Aug. 11 /PRNewswire/ -- The Coca-Cola Company today announced results of


independent laboratory tests confirming that the Company's soft drinks in India meet the
stringent purity criteria set by the European Union for pesticides in bottled water.

"There is no issue with the quality and purity of our products," said Rick Frazier, vice
president of Technical Stewardship, The Coca-Cola Company.
Samples of Coca-Cola, Thums Up, Sprite, Fanta and Limca have been tested by the highly
respected independent laboratory, Central Science Laboratories (CSL), in the United
Kingdom.

Re-entry of Coca-Cola in 1993


On the 26th of October 1993, Coca-Cola re-entered the Indian market having acquired some
of the leading Indian soft drink brands from Parle, namely Thums-Up, Maaza, Limca,
Goldspot & Citra. These brands joined Coke’s portfolio of international brands i.e. Coca-
Cola, Sprite, Fanta, Schweppes as Coca-Cola India took control of the top soft drink brands
in India from the very beginning. From 1993 to 2003, company invested US $ 1 billion in
India.

The beginning of Cola War


For the Cricket World Cup 1996, Pepsi was not the official sponsor of the tournament, Coke
was. But Pepsi had a whole pool of best players roped in as brand ambassadors from the sub
continent and abroad. The ad campaign of “Nothing Official About it” rocked the country
and despite Coke being the official sponsor, it was Pepsi which hogged the publicity.

In 1998, with the release of blockbuster movie “Kuch Kuch Hota Hai”, Pepsi took out
another ace from its sleeve, featuring Shahrukh, Rani and Kajol in its ad. The punch line was
“Yeh Dil Maange More” which was an iconic line and struck a chord amongst the people.

Coca-Cola countered by spoofing the ad, using Sprite, to hilarious effect. Pepsi responded
with a spoof of its own, starring Azhar and Jadeja hitting on the Coke line of “Eat Cricket,
Sleep Cricket, Drink Only Coca Cola” with the punch line of “More More Cricket, More
More Pepsi”. Coke again hit back, this time with Thumbs Up ad. They portrayed the
cricketers as monkeys and ended the ad with “Don’t be a bunder (monkey) Taste the
Thunder!” Situation turned ugly with Pepsi going to court and finally ended with Coke
withdrawing the ad.

The Cola wars went on full-fledged till 2003, when a pesticide controversy forced Coke and
Pepsi to fight on the same side in so called “India's New Cola Wars”.

The Controversies
Presence of Pesticides: In 2003, the Centre for Science and Environment (CSE) findings
stirred the beverage industry in India. CSE claimed to find dangerous levels of pesticides in
all the 57 samples of 11 soft drinks brands collected by the organization from 25 different
manufacturing units of Coca-Cola and PepsiCo spread over 12 states. The study found a
cocktail of three-five different pesticides in all the samples - on an average 24 times higher
than norms laid down by government-run Bureau of Indian Standard (BIS). Rajasthan,
Madhya Pradesh, Chhattisgarh, Gujarat and Kerala banned the sale of Colas in schools,
colleges and government departments, and other states also took adversarial measures.

The day after the CSE’s announcement, Coke and Pepsi came together in a rare show of
solidarity at a joint press conference. The companies attacked the credibility of the CSE and
their lab results, citing regular testing at independent laboratories proving the safety of their
products. They promised to provide this data to the public, threatened legal action against the
CSE while seeking a gag order, and contacted the United States Embassy in India for
assistance. They roped in major film stars to explain their purity to public. Despite all these
measures, sales dipped by as much as 80% in some regions. The soft drinks industry took
over a year to get back on the growth track.

Ground Water Crisis: Coca-Cola was recently accused of ground water depletion in many
areas of the country. Coca-Cola’s bottling operations – which extract hundreds of millions of
liters of water from the groundwater resource – have significantly worsened the water crisis
as groundwater levels have dropped sharply since Coca-Cola started its operations. The
company was also accused of indiscriminately dumping its toxic waste into the surrounding
areas – polluting the water as well as the land. The Coke reiterated its commitment to trim
down water usage and take steps towards environment sustainability and farmer’s welfare.
However, activists retort that Coca Cola is in the business of water usage and wasting,
creating a luxury product largely for the middle class. They are unlikely to put water concerns
over profits, until they are forced to.

The road ahead:


Amidst various allegations and controversies, the soft drinks industry in India, supported by
its booming economy, strengthening middle class and low per capita consumption, is growing
at a cruising pace. The focus has shifted from carbonated drinks to Fruit drinks, with both the
companies launching Lemon drinks in 2009-10. In the next few years, the fruit juice category
is likely to carry the growth flag forward as consumers become more health conscious. The
companies are likely to take more steps to deal with environment sustainability. But the Cola
wars are here to stay. We as customers can be assured of superior products and hilarious ads
in the process.

COLA WAR

When the cola giants, Pepsi and Coke, entered the Indian market, they brought with them the cola wars that had
become part of global folklore. This case study details the various battles fought in India by the two rivals with
its focus on the publicity campaigns where the two sought to steal each other's fizz.

"Our real competition is water, tea, nimbupani and Pepsi... in that order."
- Coke sources in 1996.

"When you're No 2 and you're struggling, you have to be more innovative, work better, and be more
resilient. If we became No 1, we would redefine the market so we became No 2! The fact is that our
competition with the Coca-Cola company is the single most important reason we've accomplished
what we have. And if they were honest, they would say the same thing."

- Pepsi sources in 1998.

"Both companies did not really concentrate on the fundamentals of marketing like building strong
brand equity in the market, and thus had to resort to such tactics to garner market shares."

- Business India in 1998.

Pepsi vs. Coke


The cola wars had become a part of global folklore - something all of us took for granted. However, for the
companies involved, it was a matter of 'fight or succumb.'Both print and electronic media served as battlefields,
with the most bitter of the cola wars often seen in form of the comparative advertisements.

In the early 1970s, the US soft-drinks market was on the verge of maturity, and as the major players, Coke and
Pepsi offered products that 'looked the same and tasted the same,'substantial market share growth seemed
unlikely. However, Coke and Pepsi kept rejuvenating the market through product modifications and
pricing/promotion/distribution tactics.

As the competition was intense, the companies had to frequently implement strategic changes in
order to gain competitive advantage. The only way to do this, apart from introducing cosmetic
product innovations, was to fight it out in the marketplace.

This modus operandi was followed in the Indian markets as well with Coke and Pepsi
resorting to more innovative tactics to generate consumer interest. In essence, the companies
were trying to increase the whole market pie, as the market-shares war seemed to get
nowhere. This was because both the companies came out with contradictory market share
figures as per surveys conducted by their respective agencies - ORG (Coke) and IMRB
(Pepsi). For instance, in August 2000, Pepsi claimed to have increased its market share for
the first five months of calendar year 2000 to 49% from 47.3%, while Coke claimed to have
increased its share in the market to 57%, in the same period, from 55%

Media reports claimed that the rivalry between Coke and Pepsi had ceased to generate sustained
public interest, as it used to in the initial years of the cola brawls worldwide. They added that it was
all just a lot of noise to hardsell a product that had no inherent merit.

The Players

Coke had entered the Indian soft drinks market way back in the 1970s. The company was the
market leader till 1977, when it had to exit the country following policy changes regarding
MNCs operating in India. Over the next few years, a host of local brands emerged such as
Campa Cola, Thumps Up, Gold Spot and Limca etc. However, with the entry of Pepsi and
Coke in the 1990s, almost the entire market went under their control. Making billions from
selling carbonated/colored/sweetened water for over 100 years, Coke and Pepsi had emerged
as truly global brands.

Coke was born 11 years before Pepsi in 1887 and, a century later it still maintained its lead in the
global cola market. Pepsi, having always been number two, kept trying harder and harder to beat
Coke at its own game.

In this never-ending duel, there was always a new battlefront opening up somewhere. In India
the battle was more intense, as India was one of the very few areas where Pepsi was the
leader in the cola segment.

Coke re-entered India in 1993 and soon entered into a deal with Parle, which had a 60%
market share in the soft drinks segment with its brands Limca, Thums Up and Gold Spot.

Following this, Coke turned into the absolute market leader overnight. The company also
acquired Cadbury Schweppes'soft drink brands Crush, Canada Dry and Sport Cola in early
1999.

Coke was mainly a franchisee-driven operation with the company supplying its soft drink concentrate
to its bottlers around the world. Pepsi took the more capital-intensive route of owning and running its
own bottling factories alongside those of its franchisees.

The Rivalry on Various Fronts


I -Bottling

Bottling was the biggest area of conflict between Pepsi and Coke. This was because, bottling
operations held the key to distribution, an extremely important feature for soft-drink marketing. As
the wars intensified, both companies took pains to maintain good relationships with bottlers, in order
to avoid defections to the other camp.

II -Advertising
When Coke re-entered India, it found Pepsi had already established itself in the soft drinks
market. The global advertisement wars between the cola giants quickly spread to India as
well. Internationally, Pepsi had always been seen as the more aggressive and offensive of the
two, and its advertisements the world over were believed to be more popular than Coke's.

It was rumored that at any given point of time, both the companies had their spies in the other
camp. The advertising agencies of both the companies (Chaitra Leo Burnett for Coke and
HTA for Pepsi) were also reported to have insiders in each other's offices who reported to
their respective heads on a daily basis...
III -Product Launches

Pepsi beat Coke in the Diet-Cola segment, as it managed to launch Diet Pepsi much before Coke
could launch Diet Coke. After the Government gave clearance to the use of Aspertame and
Acesulfame-K (potassium) in combination (ASK), for use in low-calorie soft drinks, Pepsi officials lost
no time in rolling out Diet Pepsi at its Roha plant and sending it to retail outlets in Mumbai.

IV -Poaching

Pepsi and Coke fought the war on a new turf in the late 1990s. In May 1998, Pepsi filed a
petition against Coke alleging that Coke had 'entered into a conspiracy'to disrupt its business
operations. Coke was accused of luring away three of Pepsi's key sales personnel from
Kanpur, going as far as to offer Rs 10 lakh a year in pay and perks to one of them, almost five
times what Pepsi was paying him. Sales personnel who were earning Rs 48,000 per annum
were offered Rs 1.86 lakh a year. Many truck drivers in the Goa bottling plant who were
getting Rs 2,500 a month moved to Coke who gave them Rs 10,000 a month.

While new recruits in the soft drinks industry averaged a pay hike of between 40-60% Coke had offered 300-
400%. Coke, in its reply filed with the Delhi High Court, strongly denied the allegations and also asked for the
charges to be dropped since Pepsi had not quantified any damages.

V -Other Fronts

• Till the late 1980s, the standard SKU for a soft drink was 200 ml. Around 1989, Pepsi launched 250 ml bottles
and the market also moved on to the new standard size. When Coke re-entered India in 1993, it introduced 300
ml as the smallest bottle size. Soon, Pepsi followed and 300 ml became the standard.

But around 1996, the excise component led to an increase in prices and a single 300 ml
purchase became expensive. Both the companies thus decided to bring back the 200 ml
bottle, In early 1996, Coke launched its 200 ml bottles in Meerut and gradually extended to
Kanpur, Varanasi, Punjab and Gujarat, and later to the south...

• In May 1996, Coke launched Thums Up in blue cans, with four different pictures depicting
'macho sports'such as sky diving, surfing, wind-surfing and snow-boarding. Much to Pepsi's
chagrin, the cans were colored blue - the color Pepsi had chosen for its identity a month
earlier, in response to Coke's 'red'identity.

• There were frequent complaints from both the players about their bottlers and retailers being
hijacked. Pepsi's blue painted retail outlets being painted in Coke's red color overnight and vice-versa
was a common phenomena in the 1990s.

• Coke also turned its attention to Pepsi's stronghold - the retail outlets. Between 1996-98,
Coke doubled its reach to a reported 5 lakh outlets, when Pepsi was present at only 3.5 lakh
outlets.

To reach out to smaller markets, interceptor units in the form of mobile vans were also
launched by Coke in 1998 in Andhra Pradesh, Tamil Nadu and West Bengal.

However, in its rush to beat Pepsi at the retail game, Coke seemed to have faltered on the
service front. For instance, many shops in Uttar Pradesh frequently ran out of stock and there
was no servicing for Coke's coolers...
Is The Rivalry Healthy?

In a market where the product and tastes remained virtually indistinguishable and fairly constant, brand
recognition was a crucial factor for the cola companies. The quest for better brand recognition was the guiding
force for Coke and Pepsi to a large extent.
A relentless frontal attack strategy is what Coca-Cola in India continually launches against its
customary rival Pepsi. Of course, Coke in India attacks Pepsi because not only can it match up with
Pepsi, which still is the market leader in India, but also gives it a severe psychological trouble with
its dominant flanking brand, Thums Up. According to statistics, Thums Up is the number 2 brand in
the Indian soft drink industry, third being Coke itself. Coke’s inexorable attack on Pepsi on the too
sweet taste of the latter (Offensive Principle 2: Find a weakness in the leader’s strength and attack
at that point), also creates a huge psychosomatic incongruity. Coke being world wide superior to
Pepsi is trying to create a battlefield positioning where the ultimate supremacy of the cola war in
India goes to Coca-Cola.

Coke has realised that this battle for consumer positioning is extremely important in the
emotionally charged Indian market and that’s what supremacy is all about. The attack is also
strategic on the cola front, with stronger taste appeal in both the brands being made the
premeditated focus. Only time can tell whether or not Coca-Cola India’s ruthless attack on Pepsi
will pay dividends or Pepsi would continue to find favour in the consumers’ mind.

Cola war gets personal for Pepsi chief


Penny Macrae, New Delhi
September 11, 2006

US COLA giant PepsiCo has put the head of its India operations in front of TV
cameras in a new bid to counter charges of high pesticide levels in its colas.

A just-released ad shows PepsiCo India chairman Rajeev Bakshi walking a young


man through a plant purification process and saying the colas carry his "personal
guarantee" they are safe "for you, for me and for my children".

"Our consumer research and feedback indicated consumers wanted the company
to directly reassure them our products are completely safe," Mr Bakshi said.

The ad is the latest tactic in Pepsi's fight-back since a New Delhi environmental
group last month released a report claiming high levels of toxic chemicals in 57
drink products from 25 Indian Pepsi and Coca-Cola plants.

The allegations were splashed on newspaper front pages and prompted southern
Kerala state to ban Coke and Pepsi while five other states banned them from sale
in schools and government offices. The Federal Opposition demanded a national
ban while protesters went on cola-bottle smashing sprees.

The cola rivals, which account for 99 per cent of India's huge soft drinks market,
have insisted through newspaper ads and public statements that their locally
bottled drinks meet international safety standards.

The Indian Government has since said the report by the Centre for Science and
Environment was "inconclusive" but the state-level bans on their products remain
in place amid continued consumer wariness.

"Basic consumer confidence has been shaken and it (the ad campaign) is one step
in rebuilding the connect and rebuilding consumer confidence," Abhiram Seth,
PepsiCo India's external affairs executive director, said late last week.

The ad was initially being shown in Hindi, with plans for it to be broadcast in other
Indian languages later, Mr Seth said.

Pepsi launched the ad as a result of consumer group feedback that "a message
from the owner of the company" could help improve Pepsi's Indian image "and the
closest to that for Pepsi is the chairman", he said.

Coca-Cola would not say if it planned to follow Pepsi's lead in putting its executives
in front of TV cameras, citing commercial confidentiality.
Pepsi Sets Off a Cola War in India
March 21, 1988

More than a decade after Coca-Cola was kicked out of India in a burst of economic
nationalism, a new cola war has erupted here over a proposal to let Pepsi-Cola compete
with local soft-drink producers.

The fight makes the fierce competition between Coke and Pepsi in the United States look
polite by comparison.

In recent weeks, the Parliamentary debate has echoed with fears that the Pepsi proposal
could undermine India's booming domestic soft-drink industry. Going further, an
associate of Prime Minister Rajiv Gandhi charged that Pepsi might be part of a Western
plot to subvert India.

''Do we need Pepsi at the cost of the country's security?'' asked K.N. Singh, an official of
the ruling Congress Party. Pepsi Support in the North

On the other side, Pepsi has enlisted broad support among politicians, including many
Sikh leaders and others in the troubled northern state of Punjab, where it wants to build its
food and beverage processing plants.

These leaders argue that the Pepsi proposal could actually help subdue Sikh terrorism by
providing jobs to disaffected young people. ''This project will help the Punjabi farmers
increase their incomes, generate employment and help our economy,'' said Amarinder
Singh, a prominent Sikh leader.

The fight over Pepsi's proposed entry is widely seen as a test of the professed commitment of
India to liberalizing its industrial policies, particularly the maze of regulations, licenses, permits
and quotas that have long stifled competition and kept prices high. Political Connections

The $17 million deal with Pepisco Inc. would be one of the smaller links with foreign companies
established since Prime Minister Gandhi moved in 1985 to open up Indian industry to more
competition from overseas. But no such proposal has generated more controversy, perhaps
because all the participants are so politically well connected.

''If this deal does not go through, it will show that India is the only really socialist country left on
earth,'' said a former finance ministry official, with evident sarcasm. ''Even China and the Soviet
Union have allowed more foreigners in. We're the only ones left in the world clinging to this
outmoded system of state control.''

Behind the battle, the Indian soft- drink market has grown to 2.5 billion bottles a year, nearly five
times the level in 1978 after Coca-Cola was forced to leave. Even so, per-capita consumption of
soft drinks in India is low compared with that in other developing countries. Thums Up Leads the
Fight

Today, 70 percent of the cola market is controlled by Parle Exports Private Ltd., a
Bombay-based company with $150 million in sales that is leading the battle against
Pepsi. The cola drink marketed by Parle is called Thums Up.

Indeed, many politicians say Ramesh Chauhan, chairman of Parle, was instrumental in
getting the Indian Government to oust Coca-Cola in 1977, which it did by demanding that
it reduce its equity and disclose its secret cola formula to the Government.

At the time, Mr. Chauhan was considered close to Prime Minister Morarji Desai, while
the businessmen who operated the Coca-Cola franchise were allied with Indira Gandhi
who later became Prime Minister. In any case, Mr. Chauhan's company did so well since
then that it now exports its own fruit juice drinks to the United States and other countries.
Parle's biggest seller in the United States is Maaza Mango, which, as its name indicates, is
a mango pulp drink. Blunt Business Leader

Mr. Chauhan, a blunt and highly respected figure in the Bombay business community,
denies that he is trying to protect his company from competition. Instead, he says foreign
capital and imports should be restricted to high-technology areas in which India lacks the
expertise to make the products itself.

Pepsi has been trying to break into the Indian market for years, even agreeing not to
market its drink under the name Pepsi-Cola.

Under the current proposal, Pepsi would have less than a 40 percent share of a
collaboration with Voltas International Ltd., a division of Tata Industries, and Punjab
Agro-Industries, a Government unit.

The deal would involve producing not only a cola drink but also potato chips, corn chips,
fruit drinks and sauces - ''things that mom can make,'' according to Mr. Chauhan, who
asserts that Pepsi has come up with the idea of making these food products simply as an
excuse to get in on the soft-drink business. Substantial Imports

The Pepsi proposal does indeed call for substantial imports of equipment and ingredients,
which has set off alarms among those worried about India's balance of payments. But
advocates for Pepsi argue that the company would be introducing sophisticated
technologies.

''Right now, 30 percent of all fruits grown in Punjab are wasted,'' said M. Z .A. Baig,
chief executive of Tata Services, a participant in the project. ''Our project would end this
waste. What the industry needs right now is new technology and know-how. We'll bring
in research centers to advise farmers and help them diversify.''

More important, Pepsi has pledged that it will export $150 million worth of food products
in the next 10 years, five times the amount that it says it will have imported. In addition, it
has promised to limit its sale of soft drinks domestically to 25 percent of its total sales.
Many Millions of Dollars

''If we are to be allowed into this country, it will be not for a few dollars more, but for
many, many million dollars more,'' Ramesh Vangel, Pepsi's director for the project, told
an Indian magazine this month.

But to many analysts the central issue goes beyond the Pepsi proposal. The question, they
say, is whether India is willing to open its markets to competition in a visible way.

'Pepsi has persevered for years, to its credit,'' Mr. Baig said. ''In the end, this is a
test case of the Government's liberalization policy. Businessmen abroad are going
to be looking at it that way.''
Marketplace Briefing -- Coca-Cola's war with Pepsi takes a new spin

December 10, 1997

With arch rival Coca-Cola sealing an endorsement deal with current batting
sensation, Saurav Ganguly, to ride the cricketing season, Pepsi too is sharpening its
claws with a little help from Ajay Jadeja and Sanath Jayasuriya. The new print-
and electronic-media campaign will be released on December 21 to coincide with
the three-nation one-day tournament sponsored by Pepsi. The Jadeja ad will soon
be followed by Jayasuriya's endorsement. Pepsi is also shooting a fresh ad with
Rahul Dravid. All the new ads are being shot by Pepsi's steady, Prahalad Kakar.
However, the company has no plans to put all its three men in a common ad.
Guess, Pepsi has learned a lesson from its famous Tendulkar-Azhar-Kambli ad.
With Kambli going totally out of form and Azhar belting a very indifferent
performance, the ad could have very few runs. According to the marketing pundits,
the new campaigns from Pepsi should help the beverage major combat Coke's
strategy of getting associated with cricket as far as the consumer franchise is
concerned. In fact, it is for the first time worldwide that Coke has signed a
celebrity to endorse its brands. Clearly, for Pepsi three is not a crowd.

Cheers for Ogilvy & Mather: It's celebration time at Ogilvy & Mather
advertising agency. After gaining a clutch of high-profile accounts like Lakme and
Annapurna, ringing in the happy notes once again for the agency are Mumbai's
office's new head Piyush Pandey and his ace creative director, Sonal Dabral. For
Pandey, the accolades are for his print campaign for Pepsi which has fetched him
the prestigious Grand Prix award at the London International Awards. With the
tongue firmly in cheek, the campaign reads like this: " No to Dope, No to Heroin,
Say No to Coke! A public service message from Pepsi-Cola". Unfortunately, this
ad would not be used in the country as it is for Pepsi's Phillipines operations.

Accolades for Dabral: Dabral, on the other hand, will be the recipient of the
Living Legends award instituted by the Indo-American Society to commemorate
50 years of India's independence. The award is being given to people who "will
help usher India in to the 21st century". Dabral gets to share the stage with other
advertising luminaries like Alyque Padamsee and Sylvester D'Cunha and
industrialists like Kumarmangalam Birla, Rajiv Bajaj and Keshub Mahindra

Intranet for Daily Thanthi: Planetasia.com, the country's largest Internet business
solutions company, is in the process of developing a comprehensive Intranet for
handling business operations for the Chennai-based vernacular paper Daily
Thanthi. The new package seeks to handle four key functions: booking space for
advertisements, digitising ads, handle archival material and support management
processes. The newspaper hopes to increase its speed of service to advertisers to
enhance competitiveness. The new system will also save time in scanning
advertisement copy and proofs, while also helping the paper in planning its layouts
better.

Bridgestone tyres to hit market by mid-1998: The steel-belted radial tyres,


manufactured using the latest Bridgestone technology, will be available in the
domestic market by the middle of next year. The joint venture company set up by
the world's largest tyre and rubber goods producer, Bridgestone Corporation, Japan
and the Associated Cement Cos Ltd (ACC), had commenced trial production last
November at its plant at Kheda, near Indore. Bridgestone ACC India Ltd is
confident that there is immense opportunity for radialising the automobile-tyre
sector, specially the passenger-car segment. The company is banking on its
strategy of wooing international automobile majors which are setting up base in the
country. The company has already been in talks with most of the leading car
manufacturers with the pitch that it is an internationally known vendor for
supplying quality products. Bridgestone ACC's managing director K. Sasamoto
claims to have received a positive response from most of the leading car
manufacturers. Bridgestone Corporation has developed these tyres after
comprehensive studies of domestic roads and climatic conditions and extensive
research at its Tokyo technical centre.

Supercars unveils tyre sealant: Supercars, a division of AKVA Investments Pvt


Ltd, has launched Superseal 2000, a tyre sealant in India. Supercars vice president
(marketing) M Shivakumar said the new product will be available through its three
franchisees in South India. The Bangalore-based company has entered into a
strategic alliance with Hercules Sealants Corporation of the United States, the
manufacturers of Superseal 2000 for Supercars. The new product remains
homogeneous and stable under varying environmental conditions inside as well as
outside tyres and tubes. Superseal contains polymers, adhesive agents, natural and
synthetic fibres and other kinds of micro-solids. The company claims that the eco-
friendly product increases tyre tread life by 20 per cent by maintaining constant air
pressure and reduces vehicle down time and operational costs due to punctures.

April 29, 2006

Cola Wars In India


For the Cricket World Cup 1996, Pepsi was not the official sponsor of the tournament, Coke was but
Pepsi had a whole kitty of best players from the sub continent and abroad. The ad campaign of
“Nothing Official About it rocked the country and knocked the wind from Coke’s Lungs. Possibly from
this time onwards Coke also realized the value of celebrities in India and henceforth went ahead with
that strategy.
Another consequence of this campaign was that from the next Cricket World Cup, advertisers began
signing exclusive contracts which stipulated that competitors can’t have players who are in the
tournament acting in their ads. And sadly for Coke, it was Pepsi which was “official” this time.
In 1998, the movie Kuch Kuch Hota Hai took the country by storm. Pepsi then took out another ace
from its sleeve. This time SRK, Rani and Kajol starred in the ad. Also starring was the future star
Shahid Kapoor who was noticed by the industry. The punchline this time was “Yeh Dil Maange More”
which was an iconic line and struck a chord amongst the people.
The Coke people responded to this ad in a different and unique way. They actually spoofed the ad,
the product used being Sprite, again to hilarious effect.
Pepsi responded with a spoof on it’s on its own, starring Azhar and Jadeja hitting on the Coke line of
“Eat Cricket, Sleep Cricket, Drink Only Coca Cola” with the punch line of “More More Cricket, More
More Pepsi”. Coke again hit back, this time with Thumbs Up ad. They portrayed the cricketers as
monkeys and ended the ad with “Don’t be a bunder (monkey!!) Taste The Thunder!!” Things turned
ugly with Pepsi going to court and finally ended with Coke withdrawing the ad.
The year 2000 heralded the rise of a new superstar, Hrithik Roshan. Both Coke and Pepsi rushed to
sign him, but Coke won (possibly due to the fact that they promised that all the ads starring the
superstar would be directed by his father). The first ads starring Hrithik Roshan were launched in
Diwali Season. Pepsi hit back this time with a SRK ad which also had a Hrithik look alike. This ad was
directed by Prahlaad Kakkar and was in a bad taste. Rumors ran about SRK’s insecurity and rest but
the episode really was a footnote in the epic battle.
Around this time Coke’s market share surpassed Pepsi for the first time since Coke’s launch in 1994
(Trivia: Coke was first re-launched in India in Agra) and suddenly Coke was defending and Pepsi
attacking the market share.
Now the wars shifted from cola to clear lime segment. Coke realizing that in India Thumbs Up was a
valuable brand and it could not use it for opponent bashing. This time it was between Sprite and
Pepsi’s Mountain Dew.
Pepsi had launched Dew with “Do the Dew” tagline emphasizing on Adventure sports. Sprite killed the
ad with “Do The Do” ad which was funny and memorable.
The Cola Wars are here to stay. Its been just 10 odd years in India for them to start. In the USA they
are on since a 100 years. The battle actually throws up some amazing ads and lets hope they
continue.
Yeh Dil Maange More!!!
Pepsi v Coca-Cola war turns hot

The ongoing cola war between global rivals Pepsi and Coca-Cola
has taken a weird twist in India with the former dragging the latter to court. The
charge: Coca-Cola has snatched employees, bottlers, and agents, all of whom are
bound to Pepsi by a contract.

Pepsi has charged Coke with having entered into a conspiracy to disrupt its
business operations by inducing key employees and associates to break existing
contracts illegally.

Pepsi has sought a permanent injunction and an ex parte order against coke,
restraining it from taking away Pepsi's employees and business associates. Pepsi
has also reserved the right to seek financial damages from Coke at a later date if
necessary.

Pepsi has claimed that a dozen middle-level managers and three territory managers
broke their contracts with Pepsi to join Coke in recent months, while during the
last year and half, seven managers quit Pepsi to join Coca-Cola.

Justice C M Nayar of the Delhi high court on April 17 issued notices and summons
to Coca-Cola and 15 others for May 6. However, Justice Nayar refused to grant the
ex parte injunction sought by Pepsi India to stop the alleged inducements by Coke
in offering employment to Pepsi's employees while the suit was pending in court.

On behalf of Pepsi, Ashok Desai and Arun Jaitley contended that Coca-Cola had
been "rattled by the huge success of Pepsi in India entered into a conspiracy during
the last six months to cause loss and damage to Pepsi's business interests by
adopting unfair and illegal means."

It added that Coca-Cola had approached many key managers and had successfully
lured a commercial manager of its bottling business Gaurav Duggal, and a manager
in Surat Sailesh Joshi, besides others.

Pepsi charged that while initially these approaches were sporadic, over the last six
months it is clear that Coca-Cola has changed its strategy and has decided to
consciously target and approach key employees of Pepsi at various locations in
India.

The company has alleged that in most cases, the employees have not been given
time to adhere to the 90-day notice period and the one-year confidentiality
agreement. The latter deal bars employees joining its rivals for at least a year.
Desai claimed Coke's actions would directly harm the business interests of Pepsi,
which had invested over $300 million in the country in establishing business
infrastructure.

In its defence, Coke is expected to seek relief in the Indian Constitution which
states that there can be no restriction on the movement of labour. Besides, any
effort by a company to restrict its employees from joining other companies might
fall foul of the Monopolies and Restrictvie Trade Practices Act as an unfair trade
practice.

Pepsi has cited the instance of Coke snapping up cricketer Javagal Srinath in spite
of the latter signing a contract with Pepsi's sports consultant, 21st Century Media.
However, media reports, quoting sources, said that Srinath's contract had been only
in the verbal stage.

Similarly, Pepsi has charged Coke with inducing the Board of Control for Cricket
in India to give the sponsorship of the recently concluded Pepsi Triangular Cricket
Series to Coke, as acknowledged in the BCCI submission before the Bombay high
court, even while a contract was signed with Pepsi.

Pepsi has listed the case of Coke trying to induce its music consultant DNA
Networks Private Ltd, which organised the Yanni show, to snap its ties with Pepsi
and join Coke.

Incidentally, in results announced for the first three months of the year, Pepsi has
swept Coca-Cola aside. Pepsi has reported a growth of 27 per cent compared to
Coke's 21 per cent during the same period. In the first three months of last year,
Pepsi grew by 18 per cent only.

Coca-Cola India chief executive Donald Short had announced that Coke would
grow by at least 20 per cent for the whole of 1998. Coca-Cola, along with the Parle
brands it acquired when it came into India -- Thums Up, Limca, and Gold Spot --
continue to dominate India with a 55 per cent market share to Pepsi's 43 per cent.
But in the cola segment, Coke comes a poor third after Thums Up and Pepsi.

The current summer season is the most important for the cola giants, with
consumption at its peak.
A mischievous Pepsi ad annoys Coke and signals a new turn in India's long-running soft-drink
slugfest
By MASEEH RAHMAN New Delhi, June 12, 2000

Hrithik Roshan is the real thing. After appearing in just one film, the young Bollywood actor with the
rippling muscles and the vulnerable look, a cross between Sylvester Stallone and Leonardo Di Caprio,
has become India's No. 1 heartthrob. So it was only fitting that the world's biggest soft-drink company,
Coca-Cola, should grab him as a local pitchman. But when Coke released its Hrithik commercial at
the end of April, it soon found itself rudely upstaged by arch-rival Pepsi, which aired its own TV spot
last month poking fun at Hrithik Roshan. In the Pepsi ad, a Hrithik look-alike wearing braces on his
teeth is spurned by a pretty girl, who instead kisses Shah Rukh Khan, a Bollywood star who has
appeared in Pepsi's cola ads for the past few years.

India's Cola War is getting punchier. Hrithik, clearly hurt, shot off a letter to Pepsi claiming, with
unconvincing modesty, that he was a newcomer who needed encouragement, not a put-down. His
fans, meanwhile, wrote angry letters to local newspapers and even organized a street demo in
Calcutta. His father Rakesh Roshan, a prominent Bollywood filmmaker who produced and directed
Hrithik's smash-hit debut Kaho Naa ... Pyaar Hai, complained publicly that Pepsi was ridiculing his
son because it had lost the bidding battle for Hrithik.

The sizzle over Pepsi's mischievous 60-second spot underscores the fierce battle raging between the
two multinationals for dominance of India's $1 billion soft-drink business. Pepsi has been selling in
India since New Delhi opened the market to foreign companies in 1991. Coca-Cola, which was forced
to leave the country in 1977, returned with a bang in 1993, buying out the leading local cola, Thums
Up, and grabbing a big slice of the action. But the worldwide leader's cola drink still ranks No. 3 in
India, behind Pepsi and Thums Up. Expect more fireworks:the American giants are pouring in millions
more in marketing dollars, signing up as pitchmen some of India's top actors, cricketers and pop
singers at fabulous fees. The more the competition, the more the noise, the better, says Ireena Vittal
of consulting firm McKinsey & Company. It'll help the soft-drink market to take off.

Pepsi is obviously enjoying the latest fracas. Its spokesmen cheekily deny that the model with the ugly
smile in its new ad is meant to be a Hrithik look-alike (There's only a passing resemblance, a
spokesman says rather disingenuously). It's the most entertaining marketing clash since the two
tangled in 1996 over the cricket World Cup, which was played on the subcontinent. Coca-Cola spent
more than $4 million for the rights to be the Cup's official sponsor. But Pepsi responded with an
irreverent TV spot poking fun at Coke and appealing to the disdain many young people have for all
things official. As a result, Coca-Cola got some mileage from being the official drink while Pepsi
boosted its image as a cola for fun-loving, free-thinking people.It was barrels of fun, says Vibha Rishi,
Pepsi's marketing director for India. Indeed, Pepsi's ads in India consistently focus on youth, who
constitute more than half of the nation's estimated 150 million soft-drink consumers. Coke,
meanwhile, has run a more broad-based campaign appealing to the entire family.

With the Hrithik song-and-dance ad, Coke seems to be acknowledging that, in India at least, the youth
market is where it's at. More than a third of India's 1 billion people are under 18. As the country
develops economically, the young, especially in urban India, will be eating and drinking very
differently, says Vittal. McKinsey, which completed a study of India's food and beverage business in
1997, predicts that by 2005, the soft-drink market will grow to around $2.4 billion. That said, India's
per-capita consumption of soft drinks is still a paltry six bottles a year, compared with 15 in Pakistan,
22 in China and more than 600 in Mexico. In India, drinking a cola is not an everyday habit, says
Vikram Sakhuja, Coca-Cola's marketing manager for India. It is reserved for special occasions--
religious festivals, family outings, sports events. Coke and Pepsi hope to change this by getting the
young hooked on cola.

There are other obstacles, though. With Indian per-capita incomes still relatively low, price matters. A
small increase last year, for instance, stagnated soft-drink sales. And Indian taste buds represent a
stumbling block: Coke and Pepsi are simply too bland to go with some highly spiced provincial
cuisines. We need more flavor, something distinctive and strong, says Ramesh Chauhan, a former
soft-drink magnate who created the somewhat spicy ThumsUp brand. Since neither Pepsi nor Coke
would ever countenance changing their sacred formulas, they'll continue to rely on stars like Hrithik to
help win over young Indians. But it's a nasty battle out there.

Cola Quarrels
The latest round has Pepsi dragging Coke to court, alleging a conspiracy and saying that its
arch-rival has gone beyond limits to grab lost. advantage.

When Coca-Cola India CEO and President Donald W. Short headed for India in
March last year after heading Coke Japan, he got a terse sayonara from his bosses
at the megacorp's headquarters in Atlanta, Georgia: "Do the right thing."

Maybe he did too much of it. Just over a year later, it's going to land his company in
court. On May 6, in the middle of the parched summer during which the Rs 3,000
crore soft-drink business scores its biggest hit -- almost 50 per cent of all soft-drink
sales takes place between April and June -- the focus will shift from how many cases
Coke sells to how it defends a case slapped on it by arch-rival Pepsi a couple of
weeks ago. So far, the two companies had restricted themselves to pitched battles in
the marketplace -- which was beginning to peak with the over-the-top advertising
battle. "The reason I went to court," Pepsico India Holdings Chairman P.M. Sinha
says, "is because I would like the fight in the marketplace".

Pepsi's Gripe
Among other things, Pepsi's petition alleges that Coke
Pepsi allegations run a range from forcing its
had "entered into a conspiracy" to disrupt its business employers and customers to leave. A
operations. "Rattled by the huge success of Pepsi in sample:

India," goes the petition, "it has become clear from the
Coke offered key Pepsi sales people salary
sequence of events in the past six months that the hikes of 300-400 per cent when the industry
defendants want to cause loss and damage to Pepsi's norm is 40 per cent -60 per cent for new
hirings.
business by adopting unfair and illegal means."
Ace endorsers like paceman Javagal Srinath
were lured into breaking their contracts with
A sampler of the salvo reads like an all-out, take-no- Pepsi.
prisoners shooting match. And a lot of the firing is
about hiring. Coke has been accused of luring away Coke tried to pressure the Board of Control
for Cricket in India to break a sponsorship
three of Pepsi's key sales personnel from Kanpur, deal it had signed for the recent Pepsi
going as far as to offer Rs 10 lakh a year in pay and Triangular Series.

perks to one of them, almost five times what Pepsi


pays him. Sales rookies who were earning Rs 48,000 per annum were offered Rs
1.86 lakh a year. Many truck drivers in the Goa bottling plant who were trundling
along on Rs 2,500 a month shifted up with Coke's bait of Rs 10,000 a month. In an
industry where new hirings average a pay hike of between 40 per cent and 60 per
cent, Coke, alleges Pepsi, was offering between 300 per cent and 400 per cent.

Other moves hurt too. Pepsi alleges that Coke's Marketing Director Sanjiv Gupta --
the whizkid behind the marketing of superstar Amitabh Bachhan's ABCL -- was to
join Pepsi in '97. But within days of his getting the appointment letter, Coke made a
counter offer. Said Gupta in his note to Pepsi: "Since our discussion, I have now
received an alternative offer more in tune with my career and financial aspirations
and I am inclined to accept the alternative offer."

Coke is playing cool and quiet even as Pepsi, drawing on an impressive battery of
legal eagles -- so far, eight top lawyers, among them former finance minister P.
Chidambaram, advocate K.K. Venugopal, former attorney-general Ashok Desai and
Arun Jaitley -- is spitting ire. Coke executives are keeping mum, saying that the
matter is sub-judice and insisting that the reply will be made in the courts. Short will
only say this: "Coca-Cola failed to connect with consumers in India initially. But now
we are delivering what is right for our customers and consumers."

Delivering value for money, delivering advertising round-houses and conducting


market coups have been standard operating procedure in the Coke vs Pepsi saga
for decades. Those who switched loyalties from one company to another have been
branded as traitors. Market gossip has it that one company has planted moles in the
other. One routinely launches attacks on the other's bottling and distribution network.
It's just hotted up in India, say market analysts, since Short's arrival.

Short does have a business mission, and he has no problems admitting to that.
Coke's short-sightedness was acute. In 1993, it began with a mammoth 69 per cent
share of the market, according to data from the Indian Market Research Bureau,
after buying out Parle's popular brands, Thums Up, Limca and Gold Spot. But then
choosing to ignore these, says J.D. Singh, professor of marketing at the International
Management Institute, Delhi, it frittered away enviable collective strength. It did not
realise that Parle's brands had enormous staying power, shown by their fightback
with Pepsi. Market share had dropped by more than 10 per cent by the end of last
year, while Pepsi's market share went up from 23 per cent to 43 per cent in the same
period. Top brass anger with the results was evident: Short is the third Coke CEO in
four years.

For its part, Pepsi didn't really push hard till Coke was about to re-enter the Indian
market, thereby frittering away its own lead-time advantage of close to four years.
"Both companies didn't really concentrate on the fundamentals of marketing like
building strong brand equity in the market, and are now resorting to short-term
strategies to garner a share of the market," says Singh. "The strategies reflect a
poverty of imagination." Singh points to the sometimes clever, mostly callow ad wars
that favour puns to scoring real points -- spending as much as Rs 70 crore a year to
do so. But there's a story away from the glare of advertising and marketing, the truth
that hurt Coke as much as it does Pepsi.

When Coke bought Parle it also inherited 56 bottlers. But many of them needed
huge investments in capital. Around the same time, Pepsi began what it calls COBO-
isation, or Company Owned Bottling Operations, because bottling infrastructure was
one of its weakest points. It had 18 plants of which almost half weren't up to the
mark. By the time Coke began to contemplate investing in its inherited bottling units,
in 1995, it ran into differences of opinion. For instance, its Ahmedabad bottler, where
former Thums Up don Ramesh Chauhan was a partner, had such differences that he
switched to Pepsi. Last year, Coke's successful Goa bottler too switched to the Pepsi
camp. Net effect: scrabble to maintain the advantage -- and regain it, depending on
which company one looks to -- in the perennial battle between the two soft-drink
giants which sizzle as often as their products claim to soothe. That, whatever the
outcome in court, is the real thing.

Innovation, and why Pepsi lost the cola war


PepsiCo’s flagship soft drink ceded the No. 2 spot to rivalCoca-Cola Co.’s Diet Coke.
It was a spot that the company had held for more than two decades. So what happened?

In a wonderful essay in AdAge , Natalie Zmuda digs in to understand why PepsiCo — a


successful American company and brand, no matter how you cut it — “blinked,” losing its
footing against its rival. It’s a tale of management woes, shortsighted strategy and confused
marketing.

In a way, it’s a story about lost corporate creativity.

She writes:

As war stories go, this one is epic. “It’s a tale of two companies, both in the same category, both
facing the same market dynamics,” said one executive close to Pepsi, referring to that brand’s
rivalry with Coke. “One of them stayed the course and recognized that brand building is a long-
term proposition. It built on its heritage, protected its brand and invested in its brand and its
people. The other went into a tailspin, trying to reverse its fortunes overnight at any cost. It lost
its best people, lost its continuity and, ultimately, lost its direction.”

One potential bright spot for the company: its Pepsi Refresh project, a social responsibility
campaign intended to foster good relationships between bottlers and their local communities.

But the big takeaway from this report is a “dearth of creative ideas surrounding” Pepsi, and too
much emphasis on “flavor-of-the-day marketing” that comes with high turnover in its marketing
department. Simply, no employees are able to stick around long enough to guide the brand
through a long-term strategy.

April 27, 2010

Pepsi plans handsets in its cola war armoury


By John Sarkar & Manisha Yadava Apr 27 2010
Tags: Companies

PepsiCo Inc may be taking the cola war in India to an altogether new level. The company plans to roll out a
licensing programme to launch Pepsi-branded merchandise that may include, hold your breath, mobile handsets.
Also on the planned portfolio are apparel, sportswear and accessories.

On a visit here last week, Michelle Minieri, president of Bradford Licensing, a company that works with PepsiCo
Inc globally, told Financial Chronicle that after China, India was in the company’s crosshairs.

She said these products worked well in Asia because many young people aspired for a western lifestyle. “We are
in talks with Pepsi officials in New York for the launch,” she said.

In parallel, her company is in talks with sourcing partners in India also. The idea is that the products can be
launched within 10 to 12 months. She did not name the partners.

Exclusive stores and other innovative retail formats hawking anything from shoes to cell phones are on the cards,
according to Minieri.

Financial Chronicle had reported in September that Pepsi would enter a completely new line of business --
exclusive fashion and apparel stores in India to sell its own brand of merchandise.

Gaurav Marya, president of License India, Bradford’s local partner, said the mid-level pricing of these products
would hold the key and Tier II and Tier III cities would be the core markets.

“In the handset category, Pepsi may be seen competing with lesser known brands seen in IPL such as Micromax
and Zen,” he added.

A PepsiCo India spokesman did not rule out the possibility of branded merchandise. He said, though, that “no
agreement yet exists under which a third party may sell garments in India carrying PepsiCo beverage trademarks
in existing or new retail outlets.”
He added that though PepsiCo India retained the option of licensing its trademarks for such purposes in the
future, “no such plans are imminent.”

The domestic organised merchandising industry is still in an embryonic stage and industry estimates peg it at a
modest Rs 200 crore to Rs 230 crore, behind countries such as China. But there is an immense potential for
growth, say industry experts.

Sajid Shamim, executive director of marketing and products of Reebok India, the company which markets Disney
and IPL teams-branded apparel, said, “We need to wait for another two years to see a boom in merchandise
sales. Right now, the total market is very small but growing very fast.”

Sportswear companies like Reebok and Puma are optimistic about growth, given the early ecnouraging response
they received, according to company officials.

On Bradford’s plans to bring PepsiCo merchandising into India, Harish Bijoor, chief executive officer of Bijoor
Consultants, said, “PepsiCo is taking the right steps by entering Tier II and III cities. Tier 1 cities are saturated.
People in the other cities are in the nascent stage of consumption and easily accept new and affordable options.”

Pepsi could cash in on the opportunity by tapping these cities in the right way, he said, adding, “Pepsi is not an
upmarket brand, neither it’s down market. It’s a mid-market brand.

Sachin against Dhoni in Cola war?

Sachin Tendulkar could be pitted against PepsiCo’s endorser


Dhoni as Coca-Cola is in talks with the star batsman for an ad
deal

BY: N.Namazi | Wed Dec 15, 2010

Beverage giant Coca-Cola is currently discussing an endorsement deal with


Sachin Tendulkar ahead of the upcoming ICC Cricket World Cup. If Sachin
comes on board for Coke, a possibility of a high-profile off-field battle between
the master blaster and his captain MS Dhoni is highly probable.

A celebrity management official familiar with the event said: “Coke is very keen to
have Tendulkar on board”. Even though no contract has been signed yet
between Coca-Cola and the cricketer, industry executives have confirmed that a
short-term deal could take place soon.

But, sports management firm, World Sports Group (WSG), (that represents
Tendulkar) and Coca-Cola have declined to comment on this issue. “We are
always in discussions with any number of leading celebrities with regard to their
support of our brands and initiatives, but we only announce formal agreements
after they are signed” a Coca-Cola India spokesman said.

Harish Krishnamachar, senior VP of WSG added: “We are not in a position to


discuss commercial terms for Sachin. Once a sponsor is signed, we will let our
client announce it”

Not easy to get the Little Master


The ICC World kicks off in February next year and Tendulkar could be playing his
last world cup. Plus, he is still immensely popular among fans. Coca-Cola wants
to bet on the star player to make sure that PepsiCo’s huge ad campaign with
Dhoni does not steal all the gains at the big event – perhaps the largest for all
marketers.

Dhoni has already signed a high-profile endorsement deal with United Breweries
for 3 years for Rs. 26 crore & also renewed his existing deal with Maxx Mobile for
7 years valued at Rs. 29 crore!

Coca-Cola cuts down prices in Delhi and Uttar Pradesh

Coca-Cola trims prices of the 600 ml bottles of all its


carbonated drinks in Delhi and Uttar Pradesh.

BY: Nargis Namazi | Fri Jan 21, 2011


Coca-Cola cuts down prices in Delhi and Uttar Pradesh

At a time when sales growth of carbonated drinks has slowed, Coca-Cola has
decided to cut down the prices of all its carbonated beverages. Hindustan Coca-
Cola Beverages, the bottling arm of Coca-Cola India, has also slightly increased
the beverage quantity of its 2-litre PET bottles, while retaining the price point of
Rs. 55.

"We cannot comment on specific pricing instances, but generally speaking,


pricing and promotional initiatives in our business is very local and is governed by
the OBPPC (occasion, brand, price, pack, channel) architecture in a given local
geography," a Coca-Colaspokesman said. However, sources close to the move
have informed that the dip in prices is impermanent – original prices will be
revised later on.
Beverage companies have been badly hit mainly due to extreme cold conditions
in the North which resulted in two back-to-back quarters of single-digit growth.
Plus, the July-September quarter witnessed single-digit growth on account of
record rainfall followed by very cold winters. The new pricing will be implemented
from this month onwards.

Both Coca-Cola and opponent PepsiCo offer similar discounts to augment sales
in select markets as special promotional offers. But, so far, PepsiCo has
maintained its prices.
"Depending on the local factors in play, our bottlers introduce various promotional
initiatives in their markets and which are consistent with the long-term growth
strategy of the Coca-Cola system in India," the Coke spokesman said.

Sachin on board for Coke at Rs. 20 cr

India’s star batsman Sachin Tendulkar signs a 3-year


endorsement deal with Coke
BY: Nargis Namazi | Thu Jan 6, 2011

TAGS: coca-cola, Coke, McCann-Erickson Worldgroup India, PepsiCo, Prasoon Joshi, Sachin Tendulkar, star batsman
Sachin Tendulkar

Sachin Tendulkar

Share

Sachin Tendulkar is finally on board for Coca-Cola. But he will not appear in Coca-Cola
brand campaigns, as per company executives. The ace batsman will be used in
corporate campaigns mostly. "This is because Sachin symbolises trust, reliability and
responsibility. We can leverage these qualities in our corporate campaigns and CSR
initiatives," a Coke executive said.
Two years agao, Coke’s rival PepsiCo had dropped Tendulkar as they wanted younger
brand ambassadors representing them.
Coca-Cola, like PepsiCo, has also been focusing on the youth-based advertisements to
push up sales. PepsiCo brought in younger celebrities such as Bollywood actors Ranbir
Kapoor and Deepika Padukone as part of its Youngistaan campaign. On the other hand,
Coca-Cola has actor Imran Khan in its recent ad-campaigns.

According to reliable sources, Coke will shoot a new TV commercial next month with
Tendulkar – the same will be scripted by Prasoon Joshi, executive chairman & chief
executive officer, McCann-Erickson Worldgroup India.

A Coca-Cola spokesperson informed that they had not entered into a contractual
agreement with Tendulkar yet. "We are always in discussions with any number of
leading celebrities with regard to their support of our brands and initiatives, but we only
announce formal agreements after they are signed," he said.

Dip in demand for Coke and Pepsi

Extended rains have shrunk sales for beverage giants Coca-


Cola and Pepsi Co.

BY: N.Namazi | Tue Sep 21, 2010


TAGS: coca-cola, Coke, Pepsi, PepsiCo

Dip in demand for Coke and Pepsi

Share

Sales of both firms (rising at a healthy 20-25% in the past eight to ten quarters)
are currently down to single digits. Though neither Coca-Cola nor PepsiCo
revealed numbers, beverage industry officials said unit case volume growth is
down to about 8-9%. PepsiCo India (beverages) CEO Praveen Someshwar said,
“The unusual rains have impacted growth.”

Company and franchisee-owned plants of both beverage companies in the region


of North India, especially UP, Delhi and Rajasthan, are running below capacity
now. Moreover, since the past two-three weeks, several production lines in these
plants have been stopped.

CK Jaipuria, a leading PepsiCo bottler with franchisee plants in Delhi and Andhra
Pradesh, said: “Production is not running to full capacity now. Last year, during
this season, there was shortage of supply because demand was exceptionally
high.

Since the April-June quarter witnessed temperatures at a 52-year-high, the


companies had considerably raised their manufacturing capacities anticipating a
strong double-digit growth in the September quarter too.

Coca-Cola posted unit case volume growth of 37% in the July-September fiscal
year 2009 quarter, PepsiCo had reported an all-time high 50% volume growth in
the same quarter last year. In the April-June quarter this year, Coca-Cola India’s
unit case volume had expanded by 22% while PepsiCo’s development in the
quarter was about 19%.
“This is possibly the first time that production lines have been halted in a season
for a prolonged period because of lack of demand and over supply,” said a
beverage industry official.

Coca-Cola has 23 company-owned plants, 22 are operated by franchisees.


Additionally, it has 11 contract packing units too. On the other hand, PepsiCo has
36 beverage bottling plants - 23 of these are owned by franchisees.

Due to lack of demand, huge amounts of unsold stocks are getting collected. This
has led to the companies pushing these products in modern trade (at least in
metros). Since the rains have compelled people to stay indoors, impulse
purchase of soft drinks through ‘kirana stores’ have also been hit. Both
companies are now hoping to increase sales via modern trade channels - where
consumers purchase grocery in bulk and less as impulse purchases.

PepsiCo: To launch Pepsi Max!

PepsiCo is all set to challenge Coca-Cola (its direct


competitor) well within a month by launching ‘Pepsi Max’, the
company’s second cola drink which will be pitted openly
against the existing market leader Thumbs Up, deemed as a
macho drink.

BY: N.Namazi | Wed Jun 23, 2010


Pepsi

A no-sugar, low-calorie drink, Pepsi Max will be marketed as a macho adult


brand. Sources familiar with the development of the brand in the company reveal
that Pepsi Max is likely to hit the market shelves in the next four or five weeks.

Even though Max is a low-calorie drink, the company has avoided in labeling the
brand as a ‘diet’ cola. Instead PepsiCo is planning to promote it as a macho drink
targeted mainly to male consumers and competing directly with Coca Cola’s
Thums Up. Currently in this segment, Thums Up is the undisputed leader as it
has been able to successfully lead the Rs, 8, 000 crore fizzy drink market.

However, a PepsiCo India spokesman said that the company “would not
comment on market speculation”. But he neither confirmed nor denied the
development. Sources close to the company’s progress, however, said PepsiCo
wants to pit Pepsi Max solidly against its opponent, Thums Up.

Thums Up was originally created by Ramesh Chauhan over three decades ago
and was later acquired by Coca-Cola India. “Besides attacking Thums Up, Pepsi
Max could also crack open the low-calorie colas market – till now a small
category, and more associated with women,” a business associate of PepsiCo
said.

The demand for diet colas in the Indian market remains trivial and occupies less
than 5% of the total aerated drinks market share despite the fact that various diet
versions have existed here for more than a decade. “The diet cola category is yet
to be cracked open in India, mainly because diets come with a taste challenge –
they taste different so are not very well received by Indian consumers,” a source
said. “Max could fill that gap since it does not contain ingredients of a diet cola
and yet is a low-calorie drink,” he added.

Currently sold in more than 40 countries, Pepsi Max will be available in bottles
and PET cans here and will be competitively priced. In response to this, Coca-
Cola may introduce Pepsi Max’s global rival Coke Zero (a sugar-free cola as well)
to upset its competitors plan. Coca-Cola is yet to test out the potential of Coke
Zero in the domestic market. But, indirect imports of Coke Zero are already
available in some stores here. PepsiCo had added more fizz to its cola brand in
Andhra Pradesh (AP) last year with the intension of disrupting the stranglehold of
Thums Up.

India is a key market for cola companies and has been observing quarterly
growth rates in excess of 20%. Thus, the market for a new arrival like Max looks
promising.

Coke and Pepsi ready for cola war in South India

Tuesday - Mar 03, 2009

Televisionpoint.com Correspondent | Hyderabad


Summer has arrived in South India and the Cola majors - Coca Cola India and PepsiCo
India - are ready for an massive marketing war in the four southern states. The South Indian
cine stars are considered larger-than-life and the cola rivalry over branding is expected to
assume mega proportions.

Coca Cola India has roped in Tamil actor Vijay as the company's face for Tamil Nadu. The
flavoured water giant has signed a one-year contract with Vijay, wherein the actor will
endorse the cola drink of the company.

"Vijay has endorsed Coca Cola between 2000 and 2003. But the brand was growing at a
rapid rate in Tamil Nadu at that point of time and the company decided to move ahead
without any celebrity." an Coca Cola official said.

"When we decided to have a face in Tamil Nadu this time round, Vijay was the first choice
because of the good rapport the company had shared with the actor in the previous
contract," the Coke official added.

The company will be releasing TV commercials featuring Vijay from the second week of
March across all the leading Tamil channels. Coca Cola already has signed up with actors
Mahesh Babu and Ganesh for Andhra Pradesh and Karnataka.

"Apart from this south Indian actresses Trisha and Genelia have also been signed contracts
with us to endorse our Fanta and Fanta Apple brands respectively," the Coke official added.
On the other hand, PepsiCo India, in an attempt to take on the iconic rival Thums Up in its
stronghold Andhra Pradesh has signed on Telugu movie actor Ram Charan Teja to endorse
Pepsi in Andhra Pradesh as part of the company's ongoing 'youngistaan' campaign.

Charan is the son of noted Telugu cine star and now Praja Rajyam president, Chiranjeevi,
who was the brand ambassador of Thums Up in the state for a long time. Thums Up is a
beverage which commands a strong following in AP, West Bengal, parts of UP and West

Moving ahead, the success of Ghajini in Bollywood has pitch forked actress Asin onto a
different platform. Contracted by PepsiCo for the last three years to appear in commercials
mainly down south, Asin will now be featured more prominently in all Mirinda orange
advertisements throughout the country.

"The reach of Asin has improved following Ghajini's success in Bollywood and she would
feature in all our advertisements in north India too," said PepsiCo International executive
vice-president (flavours) Alpana Titus.

Releasing the latest commercials featuring Asin at Coimbatore, Alpana said that Tamil Nadu
was the biggest market for the Mirinda orange drink in India. With TN being the priority
market for the orange drink, the company had planned special marketing strategies for the
state.

"The state constitutes 25% of our all India sales. Normally 80% of advertisements for the
south are made in Delhi. This time, we have adequately researched the expectations of the
local audience and devised ads accordingly in the local environment," she added.

The two new commercials with the theme 'Mirinda Kannu, Konjam Galatta Pannu' were shot
with the local audience in mind, said JWT vice-president Hari Krishnan.

"The Chennai team of JWT devised the concept for the two ads and brought out the local
flavour." The ad agency has been associated with PepsiCo for 20 years now. They have
been shot by Rajesh Krishnan, a Tamilian based out of Mumbai, he added.

While the new advertisements hit the screen at prime time on Monday across the south, the
all-India version would be released on February 25. "Despite the general recession, the
orange drink has seen a healthy double-digit growth in the last six months of 2008 and in the
early weeks of 2009. We expect it to grow further with the summer season setting in,"
Alpana said.

According to her, the company had already kick-started its aggressive campaigning for 2009
summer across all media starting with Pongal season in south. In the north, ad campaigns
will be launched around Holi.

Its combo offers with snacks from the Pepsico stable too had helped increase sales. To
attract customers, the company has also gone in for a change in packaging. "The 600 ml
plastic bottle has been designed with new curve for easy handling and the bottle now comes
in an orange colour from the earlier transparent one," Alpana said.

Coke, Pepsi gear up for World Cup war


LALITHA SRINIVASAN

Posted: Tuesday, Feb 22, 2011 at 0344 hrs IST

Tags: World Cup War | PepsiCo India | Coca-Cola India

Mumbai: There’s a new fizz in the ongoing cola war between Coca-Cola India and
PepsiCo India, as both companies gear up for the onset of summer. In a bid to take on
its arch rival, Coca-Cola India is fine-tuning communication strategy which includes,
consumer engagement programmes and mass media advertising plans to promote its
flagship brands Coke, Fanta, Limca and Thums-up in the next few months.

To start with, Coca- Cola India is planning to launch an aggressive ad campaign


featuring its new brand ambassador Sachin Tendulkar to build its corporate image. On
the other hand, PepsiCo India is in the process of rolling out a high-decibel television
campaign which includes four television commercials featuring MS Dhoni, Harbajan
Singh, Virender Sehwag and cine star Ranbir Kapoor during the ICC World Cup 2011.
To usher in the summer, PepsiCo India is currently getting ready to launch a multi-media
ad campaign to promote its brands during the peak season.

Cashing in on the popularity of the ICC World Cup 2011 and IPL-4, Coca-Cola and PepsiCo are
unleashing ad campaigns and ground activations to woo consumers. In fact, cola wars may pitch
Sachin Tendulkar against MS Dhoni in the next few months. While captain MS Dhoni is leading
PepsiCo’s ad campaigns, star batsman Sachin Tendulkar will lead Coke’s corporate and brand
campaigns. Clearly, there will be a clash between brand Dhoni and brand Sachin in the next few
months.

On Coke’s communication strategy, a company spokesperson said, “Sachin Tendulkar is our


‘Happiness Ambassador’ and we will leverage his association with the company to amplify our
CSR, corporate and brand messages.”

According to a company spokesperson, the onset of summer season provides coke an


opportunity to reinforce the company’s core creative idea and messages to the consumers for
each of the brands. “We therefore will be launching our campaigns for different brands
shortly. We will be rolling out with the campaign for Sprite based on the core creative
idea of ‘University of Freshology’. This will be followed by our campaigns for Coca-Cola,
Thums Up, Fanta, Limca and some of our still beverage brands, in course of time,” he
added.
Meanwhile , PepsiCo India has launched a brand new commercial featuring Virender
Sehwag’ and cine star Ranbir Kapoor — as an extension of its ‘Change the Game’
campaign for the ICC Cricket World Cup.” Sandeep Singh Arora, executive vice
president -marketing, Cola, PepsiCo India said, “Change the Game is a big idea in the
context of the game of cricket. With this campaign, we want to inspire the youth to
change the game, be innovative, take risks, and do things differently even if it has not
been done before.” After the World Cup 2011 PepsiCo India will be shifting its marketing
focus to launch fresh ad campaigns to promote its brands during the summer.

Posted: Tuesday , Feb 22, 2011 at 0344 hrs ISTMumbai:

There’s a new fizz in the ongoing cola war between Coca-Cola India and PepsiCo India, as
both companies gear up for the onset of summer. In a bid to take on its arch rival, Coca-Cola
India is fine-tuning communication strategy which includes, consumer engagement
programmes and mass media advertising plans to promote its flagship brands Coke, Fanta,
Limca and Thums-up in the next few months.

To start with, Coca- Cola India is planning to launch an aggressive ad campaign featuring its
new brand ambassador Sachin Tendulkar to build its corporate image. On the other hand,
PepsiCo India is in the process of rolling out a high-decibel television campaign which
includes four television commercials featuring MS Dhoni, Harbajan Singh, Virender Sehwag
and cine star Ranbir Kapoor during the ICC World Cup 2011. To usher in the summer,
PepsiCo India is currently getting ready to launch a multi-media ad campaign to promote its
brands during the peak season.

Cashing in on the popularity of the ICC World Cup 2011 and IPL-4, Coca-Cola and PepsiCo
are unleashing ad campaigns and ground activations to woo consumers. In fact, cola wars
may pitch Sachin Tendulkar against MS Dhoni in the next few months. While captain MS
Dhoni is leading PepsiCo’s ad campaigns, star batsman Sachin Tendulkar will lead Coke’s
corporate and brand campaigns. Clearly, there will be a clash between brand Dhoni and
brand Sachin in the next few months.

On Coke’s communication strategy, a company spokesperson said, “Sachin Tendulkar is our


‘Happiness Ambassador’ and we will leverage his association with the company to amplify
our CSR, corporate and brand messages.”

According to a company spokesperson, the onset of summer season provides coke an


opportunity to reinforce the company’s core creative idea and messages to the consumers
for each of the brands. “We therefore will be launching our campaigns for different brands
shortly. We will be rolling out with the campaign for Sprite based on the core creative idea of
‘University of Freshology’. This will be followed by our campaigns for Coca-Cola, Thums Up,
Fanta, Limca and some of our still beverage brands, in course of time,” he added.
Meanwhile , PepsiCo India has launched a brand new commercial featuring Virender
Sehwag’ and cine star Ranbir Kapoor — as an extension of its ‘Change the Game’ campaign
for the ICC Cricket World Cup.” Sandeep Singh Arora, executive vice president -marketing,
Cola, PepsiCo India said, “Change the Game is a big idea in the context of the game of
cricket. With this campaign, we want to inspire the youth to change the game, be innovative,
take risks, and do things differently even if it has not been done before.” After the World Cup
2011, PepsiCo India will be shifting its marketing focus to launch fresh ad campaigns to
promote its brands during the summer.

PRODUCT

PRODUCT VARIETY:

QUALITY:

DESIGN:

FEATURES:

SIZES:

GLASS PET CAN FOUNTAIN


200 ml, 300 ml, 500 ml, 1.5 L, 330 ml Various Sizes
500 ml, 1000 ml 2 L, 2.25 L,
500 ml + 100 ml
Brand Advantage
 Pepsi has become a friend to the youth and has led many youth cultures. Youngsters over the
generations have grown up with Pepsi and share an emotional connect with it, unlike any
other cola brand. Be it parties, hangouts, or just another day at home, a day is never complete
without the fizz of Pepsi!
 Pepsi, Cricket and Bollywood have been joined at the hip since the beginning. Shah Rukh
Khan, Sachin Tendulkar, Saif Ali Khan, Amitabh Bachchan, Kareena Kapoor, Priyanka
Chopra, Virender Sehwag, M. S. Dhoni, John Abraham, Ranbir Kapoor and Deepika
Padukone are a few celebrities who will go any length for a chilled Pepsi.
 The Pepsi My Can is undoubtedly the most popular cola pack of all times. It is not just a pack
but a style statement for today’s youth.

PRICE
Coca Cola marketing strategy

Focus on availability of products in market.

Focus on availability of products in outlets.

Coke products visible for consumers.

More focus in rural area

Regular market vigilance by market developer

Distribution of product according to locality

Extra focus on monopoly outlets


Aggressive rural area advertisement

Social festival in rural areas

Target core brands

Satisfy market priorities.

 Focus on availability of products in market.

Coca-Cola works on “dikhega wo bikega” philosophy. This is the main formula of the
marketing strategy of each company. So availability of product in the market isclear. For this
reason the market developer daily comes in market to check their product availability.

 Focus on availability of products in outlets.

There is big difference between the availability of products in markets and outlets. Coca-Cola
want their products displayed in each outlet in market so it is important that the product first
available in market after than it is put on outlets.

 Focus on availability of products in outlets.

The aim of Coca-Cola is that its products should be visible for the customers so company
gives to retailers racks so many display items. Now days the company is giving visicoolers to
retailers for visible their chilled product in market for more sales.

 More focus in rural area

“The rural market is a significant part of our sales promotional discount schemes whixh is
enabling us retailers link with our products”.

-Herminder Singh Chabada (STL) Coca-Cola

In 2000, the Coca-Cola India spokes woman Nantoo Banerjee said that:

“The real market in India is the rural market. If you crack it there is tremendous
potential.”

CCI begin focusing on rural areas after 2000 to increase volumes. This decision is giving a
huge size and potential market to company. It have now sifted the focus to rural India.

“THANDA” GOES RURAL

In early 2002, CCI launched a new advertising campaign for attracting more rural consumers.
The aids with India leading bollywood star Amir Khan, with movie of Lagan. The tagline
says: “Thanda Matlab Coca-Cola”

 Regular market vigilance by market developer


To know the position of Coke’s products in the market Coca-Cola appoint some executive
those go in market and checks availability, visibility of product, take care of companies
assets, check visicoolers and talk to shopkeepers and take feedback about their product.

 Distribution of product according to locality

Coca Cola company distributes their schemes according to area. Area or place where soft
drinks sold in a larger manner, on those place company gives good schemes to shopkeepers
and retailers. Place like railway station, bus stand are consider in this category and place whih
have low selling where company give small schemes to the shopkeepers.

 Extra focus on monopoly outlets

Outlets which only sales Coca-Cola product and gives good sale to company are considered
in this category, company gives extra schemes, discounts and other gifts to these shops and
tries to keep them happy and long relationship. Problem of these kind of outlets resolve as
soon as possible.

 Aggressive advertisement

Coca-Cola uses the concept of aggressive advertising for sales promotion. Companies
different schemes and advertises them with electronic and print media. These ads build bran
image and establish awareness. Brand ambassador plays an important role. Brand ambassador
encourage the today youth to trust their instincts, influence them.

Successful ad campaigns like “Jo chaho ho jaye” & “Life ho to aisi” were very popular and
had entered in youth vocabulary. In 2002, company launched the campaign “Thanda matlab
Coc-Cola” which sky rocketed the brand to make. Coca-Cola launched Amir Khan in so
many ads to capture rural market, one such ad says: “Oye Soniyo Thanda Piyo”.

 Social festivals in rural areas

Coca-Cola company time to time introduced rural social festival. In 2007, company launched
Jalasa programmed in so many rural areas like Ringus, Renwal, Chomu, Phulera, for gaining
the attention of the consumers.

MARKET SEGMENTATION OF COCA-COLA

Market can be segmented along 3 lines- outlet volume, Locality income and channel cluster:

Segmentation

Channel Cluster Locality Income Outlet Volume


Grocery
Low Diamond
Gold
Eating &
Medium Gold
drinking
High Silver
Convince
Bronze

Classification of outlets on the basis of volume:

Outlet classification Ko Vpo SLAB (phy C/s)


Diamond >800
Gold 500-799
Silver 200-499
Bronze <200

TYPES OF OUTLETS

Grocery: Outlets which are primarily engaged in retailing of food and various household
items. It include neighbourhood outlet stoking provisions, edible and general household items
of daily usages E.g., commodities like flour, pulses, rice and branded household items like
toothpaste, mosquito oil, soap, etc.

E & D: Outlets selling items to eat which are being cooked within outlet, made at the outlet
and possibility consume in outlet. They may have place of sitting. It includes Bakery/ store/
restaurants/ bars/ juice/ soft drinks/ ice cream parlor/ tea, etc.

Convenience: Includes outlets which are small stores generally accessible locally. Thes are
often located alongside busy roads. It includes chemist shops/ STD booth/ Pan bidi shops,
etc.

CHANNEL MANAGEMENT

The partner type relationship with bottlers Franchise owned bottling operation (FOBO), as
well as company owned bottling operation (COBO) network of the channel management
mostly cover these type bottling. It is this way CCI strengthens in its marketing that give its
and edge. Every number of its sales team is meticulously taught the merchandising and
display skills that can leverage the reach of te company’s bottling network to achieve high
visibility of the product.

FOBOs and COBOs:

CCI work under 2 types of bottling operation:

 FOBO (Franchise owned bottling operation)


 COBO (Company owned bottling operation)

COBO company sells products by own self. Some of the COBOs of the company are at:
Mumbai, Bangalore, Ahmadabad, Chennai, Kolkata, U.P. unit.

FOBOs: The concrete is being on sell of products by franchise system the mfg. and the
franchiser sell products in the market. Leaving COBOs, the FOBOs are in the rest of cities of
India. Some of them are Delhi, Punjab, Bihar, Nagpur, Goa, Bhubaneswar, Hyderabad, etc.

MARKET ALLOCATION

Coca-Cola has concentrated in 4 types of markets:

1. Emerging Markets: Like China and India, where there is low per capita income but
good potential for investment because of their large size of population.
2. Leading Market: Where it is leading the market in maintenance, consolidation and
selling.
3. Critical Mass Market: Where Coca-Cola has maintained and defend its position
against competition.
4. Low Share Market: Markets where Coca-Cola has low shares but where presence is
required.

TARGET CORE

The Coca-Cola Company has tier- weekly targets for sales executives, marketing
executive, market developer, sales persons and other get targets. After compleig their
targets the company give them good intensive which attract them to wok with their full
potential.

FOCUS ON FRANCHISING WITH BUILDING A CORE OF COMPANY


OWNERS

Company is now planning a franchising with building a core for all routes so that the
supply of products should be on time and the company demand “Availability of product”
can be met.
SLOGANS

PEPSI

1909-1939

Delicious and Healthful

When they find the Pepsi-Cola bottles are empty, their morale will go down another 10 points

Pepsi-Cola hits the spot, 12 full ounces, that’s a lot, Twice as much for a nickel too, Pepsi-Cola is

the Drink for you!

Nickel, nickel, nickel, nickle, Trickle, trickle, trickle, trickle…

1939-1950

Twice As Much For A Nickel Too

1950-1953

The Light Refreshment

1953-1961
Be Sociable

1961-1963

Now It’s Pepsi For Those Who Think Young

1963-1967

Come Alive! You’re In The Pepsi Generation

1967-1969

Taste That Beats The Others Cold

1969-1973

You’ve Got A Lot To Live, Pepsi’s Got A Lot To Give

1973-1975

Join The Pepsi People Feelin’ Free

1974

Lipsmackin thirst quenchin (ace tastin motivatin good buzzin cool talkin high walkin fast livin ever

givin cool fizzin) Pepsi

1975-1978

Have A Pepsi Day

1978-1981

Catch That Pepsi Spirit

1981-1982

Pepsi’s Got Your Taste For Life!

1983
Pepsi Now!

1984

Pepsi, The Choice Of A New Generation

Are you ready to take the challenge?

1985

Taste the difference

Generation Next

1986

Join the Pepsi generation: feel the taste

1989

A Generation Ahead

1992

Gotta Have It

1993

Be Young, Have Fun, Drink Pepsi

1995

Nothing Else is a Pepsi

1997

Generation Next

1998

Same Great Taste

1999
The Joy of Cola

2000

The Joy of Pepsi

2003

Pepsi. It’s the Cola

2000-2003

“Aazadi dil ki” (Hindi- meaning “Freedom of the Heart”)(India)

2003

“It’s the Cola”/”Dare for More” (Pepsi Commercial)

2003-2005

Yeh Pyas Hai Badi (Hindi meaning “This thirst is too much”)(India)

2005-2006

An ice cold Pepsi. It’s better than sex!

2006-2007

Why You Doggin’ Me/Taste the one that’s forever young

2007-2008

More Happy/Taste the once that’s forever young

2008

Yeh hai Youngistaan Meri Jaan! Hindi – meaning “This is the Young era my dear” (India and

Pakistan)

2008
Pepsi Stuff for Super Bowl Commercial

2008

Рepsi is #1

2008

Pepsify karo gai(Hindi meaning “Wanna Pepsify!”)

2008-2009

Something for Everyone

2009

Refresh everything and (during many commercials) Every Generation Refreshes The World
PROMOTION

ADVERTISEMENT:

Differences in strategies of both

Capturing the market is the main issue facing any company and when it comes to Beverage market, it
becomes more intense because there are just two players and they are fighting strongly to capture
each others market and don't have any other option.

Both Coke and Pepsi are trying to gain market share in this beverage market, which is valued at over
$30 billion a year. Just how is this done in such a competitive market is the underlying issue.
The facts are that each company is coming up with new products and ideas in order to increase their
market share. Pepsi has always taken the lead in developing new products, but Coke soon learned
their lesson and started to do the same. Coke hired marketing executives with good track records
(98). Coke also implemented cross training of managers so it would be more difficult for cliques to
form within the company

The creativity and effectiveness of each company's marketing strategy will ultimately determine the
winner with respect to sales, profits, and customer loyalty.

These two companies are constructing new ways to sell Coke and Pepsi, but they are also thinking of
ways in which to increase market share in other beverage categories. Although the goal of both
companies are exactly the same, the two companies rely on somewhat different marketing
strategies.

Pepsi has always taken more risks, acted rapidly, and was always developing new advertising ideas.
Both companies have also relied on finding new markets, especially in foreign countries. In the
foreign markets, Coke has been more successful than Pepsi. For example, in Eastern Europe, Pepsi
has relied on a barter system that proved to fail. However, in certain countries that allow direct
comparison, Pepsi has beat Coke. In foreign markets, both companies have followed the marketing
concept by offering products that meet consumer needs in order to gain market share. For instance,
in certain countries, consumers wanted a soft drink that was low in sugar, yet did not have a diet
taste or image. Pepsi responded by developing Pepsi Max.

The next step is to take fast action to develop a product that meets the requirements for that
particular region. Both companies cannot just sell one product; if they do they will not succeed. They
have to always be creating and updating their marketing plans and products. The companies must be
willing to accommodate their “target markets”.

Gaining market share occurs when a company stays one-step ahead of the competition by knowing
what the consumer wants. My recommendation is to make sure the company is always doing market
research. This way they are able to get as much feedback as possible from consumers. Next, analyze
this data as fast as possible, and then develop the new product based upon this data. Once the
product is developed, get it to the marketplace quickly. Time is a very critical factor. In my opinion,
with all of these factors taken into consideration any company should give any company a good jump
on market share.

IN BRIEF BY ARMIN

Coca-Cola vs. Pepsi, Revised Edition


In the last couple of weeks, a JPG has been making the internet rounds and, in the process, has
gathered more than 6,500 Diggs (not that that is any measure of successful success, but still…) and
has been mentioned in dozens of design and culture blogs, including many which I frequent and
respect. The problem is that the JPG is wrong and disingenuous. It comparatively illustrates the
evolution of the Pepsi and Coca-Cola logos from their beginnings in the late nineteenth century to
their current state at the end of the 2000s. The comparison chart mocks the ever-changing personality
of the Pepsi logo in contrast to Coca-Cola’s stoic script logo, unaffected by the effects of time. The
philosophical point it makes is indeed funny and, for the most part, accurate: Coca-Cola has long
been the steady brand that triumphs over Pepsi as the latter attempts to gain ground with brand
gimmicks and changes. And I will be the first to admit that the Coca-Cola logo and its consistency
over the years is far more supreme than Pepsi, but every time I saw this JPG come up in more and
more web sites and blogs I couldn’t help but cringe at the inaccuracy and deception it engenders.
Pepsi vs. Coca-Cola Logo Evolution chart with a fat X from Brand New.

True, no one will die and the lasting effects of this JPG mean nothing, really. But I felt a burden of
duty to correct a few things. The biggest problem is that the chart puts the same logo in 1885 as it
does in 2008. This is not only wrong but idiotic. Technically, the Coca-Cola logo as it exists today can
not be replicated with the tools of 1887 which, by the way, is the year the script logo was introduced.
Not 1885. Coca-Cola was first served in 1886 and even then, the first official logo of Coca-Cola was
not the script logo. It first appeared in the Atlanta Journal Constitution in 1886 as both a slab serif
and chunky sans serif — it wasn’t until mid-1887 that Frank Robinson, Coca-Cola’s bookkeeper, drew
the first traces of the Spencerian script logo that we all know.
First Coca-Cola logo appeared in the Atlanta Journal Constitution on Saturday May 23 1886.

The chart, for comic and poignant effect, then leaves a 120-year gap between the first and last logos.
It makes for a great viral JPG, but not for telling the real story. For the first ten to twenty years you
could probably find a dozen different executions of the Coca-Cola script as the logo was probably
drawn over and over for different applications. It isn’t until the 1930s and 1940s that a clear
interpretation of the logo appears and is used consistently. During the late 1950s and early 1960s the
script logo is placed within a shape, referred to as the “fishtail” logo, which is as off-brand as anything
that Coca-Cola has ever done.

The chart also fails to mention the introduction of the wave, a ubiquitous visual today, that was first
implemented in the 1960s when Lippincott Mercer was in charge of making the Coca-Cola identity
more consistent. More than any Pepsi blunder, the chart ignores the introduction of “New Coke” in
1985 with a new formula marketing and set of logos — that completely ignored the script logo — that
left a bad taste in their consumers’ mouths. Around the same time, in 1986, Landor began rolling out
an even more developed brand identity that modified the wave among other subtle changes.

Missing from the chart in the Coca-Cola evolution is the penchant for Coca-Cola to use the shape of
its bottle as an icon, acting on and off as the logo or complementary logo or subsidized logo of the
main script logo, sometimes to a confusing fault. Today’s Coca-Cola logo is, of course, amazingly
similar to what it was 124 years ago but it’s not quite fair to idolize them for a flawless consistency that
they haven’t actually earned.

Once more, I will say that the Coca-Cola evolution is admirable and few companies — probably just
GE — can claim to have extended their identity heritage across three centuries, but Coca-Cola isn’t
perfect and as much as I despise the new Pepsi identity — which in no way am I trying to defend — I
believe a fair comparison is in order.
So, here is the new chart. It’s not ideal, since I didn’t have a document as clean and specific as this
onefor Pepsi and I had to cobble the logos from different sources. The reds are all over the place and
some are in black and white.

What is the difference between Coca Cola and Pepsi?


What are the differences: Taste-Price-marketing strategies of Coca Cola and Pepsi?
"Thanks!
Taste: In my opinion, Coca-Cola has a heavier taste of candy. Hope this helps. About
price if not the same Market Strategies: Coca-Cola recently, ads memorable holiday.
While Pepsi did with many celebrity endorsements. If you remember the Coca-Cola has
always had Santa and polar bears, while Pepsi uses celebrities in their ads.
IMAGE ADVERTISING: THE ADVERTISING STRATEGIES OF
PEPSI AND COCA COLA IN INDIA
Faculty Contributor: Seema Gupta, Professor
Student Contributors: K Naganand and Avneesh Singh Narang
In a crowded product market, as companies are increasingly falling short of ways to differentiate their
products from those of the competitors, Image Advertising seems to be a way out. This article highlights
the major tenets of Image Advertising, by looking at the advertising strategies adopted by PepsiCo and
Coca Cola in India. The model developed herein seeks to understand, among many other things, the
evolution of a brand, and its role as an integral part of a company’s brand portfolio.

Contrary to popular belief, advertising is as much a science as it is an art. As the


primary mode of communication between a company and its prospective customer,
an advertisement must connect to the consumer, and create in his mind an
attractive image of the brand. The average consumer gets lost in the vast sea of
information, and is unable to differentiate one product from another.
Notwithstanding the scientific inputs that go into designing an advertising
campaign, some campaigns make history while others fail miserably. Why?
Ads are no longer informative tools, but, as Poisez aptly points out, there has been
a “shift in attention away from the physical aspects and functional benefits of
products to their symbolic associations, expressiveness”. Marketing has ventured
into the emotional, the behavioural, and the cognitive. Today, the primary objective
of the ad is to create an image. The fierce competition between cola giants PepsiCo
and The Coca Cola Company (henceforth, Coca Cola) - and the advertisement
strategies adopted by them in India to establish their respective brand images –
offers an interesting insight into Image Advertising.

Brand Identity
The first step in understanding Image Advertising is to understand the image being
created, i.e. Brand Image. Brand Image is consumers’ perception of the brand in
question. This perception might actually be different from what the brand actually
embodies – the Brand Identity. Advertising bridges the gap between Brand Image
and Brand Image.
Exhibit 1: Kapferer's Prism1

There are a number of tools available to explore the identity of a brand. One such
tool is Kapferer’s Prism (Exhibit 1). As shown in the exhibit above, there are many
facets to a brand. Kapferer identifies six key characteristics that together define the
brand:

 Physique – the physical attributes of the brand


 Personality – the personification of the brand
 Relationship – the relationship between the consumer and the brand
 Culture – the core values of the brand
 Reflection – the way consumers want to be perceived when using the brand
 Self-Image – the image that consumers have of themselves when associated with the brand
A combination of these characteristics can be used to identify what the brand
ultimately stands for. These exercises were performed on a few brands each from
the stables of both PepsiCo and Coca Cola; Exhibit 2 depicts the results of these
exercises.
Exhibit 2: Brand Proposition

Identity to Image – Evolution of Strategies


A closer look at the brand identities of each of the brands helps assess how
successful their advertising campaigns have been in creating a brand image in tune
with it, while being sensitive to the value system of the target audience.
PepsiCo’s Campaign
The analysis of Pepsi, 7 UP and Mountain Dew from the portfolio of PepsiCo puts
forth some interesting aspects about the evolution of these brands. Pepsi was one
of the first products to Indian markets after the economic reforms of 1991.
Pepsi

Pepsi began with the Yehi hai Right Choice Baby campaign, which has been
one of the most memorable campaigns of the brand, featuring celebrity endorsers
such as Shah Rukh Khan among others. The focus, as is clearly evident, is on the
product with the youth as its target segment. Yeh Dil Mange More and Yeh
Pyaas Hai Badi were some of the later campaigns.

Yeh Dil Mange More campaign was again a great success, having balanced the
emotional as well as the functional appeal of the product. Featuring Sachin
Tendulkar and many other leading stars at that point of time, this was also one of
the longest campaigns carried out by Pepsi. The company however failed to
maintain the trend and leverage it. Instead of moving on to a complete emotional
appeal platform, the company decided on a product based promotion campaign.
Though there is still some amount of emotional appeal to its campaigns, the
principal focus is on the product - it being a preferred thirst quencher.
7 UP
In its early days, 7 UP inherited the global Fido-Dido campaign for promotion in
India as well. However, with changing times and a contextual difference in India, a
much more focused campaign was required. This led to the Keep It
Cool campaign, which was targeted primarily at the youth and the teenager
segment. Hence the appeal was at a more subtle, emotional level, which was meant
to convey a potential lifestyle statement. The recent campaign of Bheja
Fry essentially leverages on the same emotional appeal where the Keep It
Cool campaign has been somewhat tweaked to have a local appeal.
Mountain Dew
Mountain Dew is the latest entrant in the product portfolio. This product too has
the appeal of being the drink of a daredevil or the No Fear personality. The
campaigns launched include Do the Dew and Dar Ke Aagey Jeet Hai . The
initial campaign was unclear in terms of its appeal and the target segment, as a
result of which the brand suffered some jolts in the beginning. However, the latest
campaign captures the No Fear or the Macho Man image. In this sense, the brand
directly competes with Thums Up from the Coca Cola Stable
Coca Cola’s Campaign
The Coca Cola campaign in India, however, has been different from that of Pepsi,
even though they both share similar product traits. Coca Cola had a presence in
India before 1977, but was subsequently forced to exit the Indian market. When the
company returned to India post liberalization, it came up with an innovative
communication and advertising strategy. Coca Cola has essentially been following
the principle of differentiation.
Coca Cola

Jo Chaaho Ho Jaaye , Coca Cola Enjoy was one of the company’s first campaigns
in India. It was remarkably well executed, and appealed both at a product level as
well as at an emotional level. These ads featured celebrities such as Hrithik Roshan
and Aishwarya Rai. The target segment for Coca Cola in its initial days was the
youth segment and this campaign clearly connected well with the segment.
However, the next advertising campaign of Thanda Matlab Coca Cola was
launched with an objective to have a mass appeal. The campaign leveraged the
product platform rather than the emotional platform that it had established earlier.
It is however, important to note here that Coca Cola made some exceptions for
India. The company has similar marketing strategies across geographies and usually
doesn’t depend on celebrity endorsements. But given the great fan-following, and
in adapting to the Indian context, the company had to initially deviate from its set
charter. However with the current campaign of Open Happiness , Coca Cola
seems to have achieved both an emotional as well as a mass appeal. There is a very
natural connect with the target segment, that of celebrating every day, and sharing
small moments of joy with our loved ones, irrespective of any barriers.
Sprite
Sprite - the other brand from the Coca Cola stable – began its journey with the
campaign titled All Taste No Gyaan . This appealed greatly to the youth who
don’t like to be preached and relish their sense of ownership and decision making.
Sprite has never depended on celebrity endorsements as a way to gain brand
recognition or consumer recall. The ads are designed to be very witty, and generally
connect very well with the target audience by capturing every day
moments. Seedhi Baat No Bakwaas - its next campaign – instantly connected
with the target audience by coming across as a brand that was different from the
other, one that focused on the individuality of the consumer. The emotional appeal
is much stronger and shows a clear sign of maturity of the campaign.

Proposed Framework
This analysis brought to light the roles played by each brand in the company’s
overall advertising strategy. Not every brand took the centre-stage: some were the
core brands, while others were used as defensive shields and offensive attackers to
fight off competition. The following framework helps classify different brands
based on the roles each of them plays:

 The Core Brand – the flagship brand of the company


 The Cover Brand – acts as a cushion to the core brand; soaks up competition
 The Stand-Alone Brand – neither core nor cover; independent
Brand Portfolio Analysis
The brands in the portfolio of Pepsi and Coca Cola play an important role in terms
of the overall impact they have on brand recall and consumer loyalty. The
framework developed herein attempts to identify the importance of each brand in
the portfolio and the role it plays.
In the case of The Coca Cola Company, Coca Cola is the core brand or the flagship
brand. The focus, therefore, is on capturing the maximum value that the brand can
generate. In this case, Sprite plays the role of a cover brand (Exhibit 3). Any spoof
or threat on Coca Cola is countered by Sprite. However, off late, Sprite is moving
up the ladder to become a core brand in the portfolio. The importance of a cover
brand is that it allows for maintaining a planned advertising strategy. This builds
brand value and creates no confusion about brand proposition.
Exhibit 3: Brand Roles

In case of PepsiCo, Pepsi is the core brand or the flagship brand. However,
Mountain Dew and 7 UP have played the role of standalone brands. Therefore,
Pepsi has to constantly respond to spoofs and threats from other brands by
tweaking or changing its planned advertising strategy. This strategy may lead to
confusion in minds of the consumer about the brand proposition. Such a situation
can be critical with regard to the connection a brand establishes with its target
consumer segment. Recent trend suggests at Mountain Dew taking up the role of a
cover brand in the PepsiCo brand portfolio.

Conclusion
This analysis led to some interesting insights. For a start, the image of the brand
must be consistent not only with its identity, but with the value system of the target
segment. It is, in fact, the complexity of the value system of the target segment of
Pepsi and Coca Cola that allows for such a contrast in advertising styles.
Furthermore, the race for prime position involves a well thought out strategy with
clear cut roles for each of the brands in a portfolio. Advertising is indeed both an
art and a science. The shift from information to image displays the rich potential of
the advertising space. The exhilarating pace of evolution from the simple creative
to the strategic takes your breath away. Definitely not for the faint hearted!
Difference between Coke and Pepsi
Amongst the leading rivals in the beverage industry, Coca-Cola and Pepsi struggle to
remain on the top and prove to be the fiercest competition for each other. Keeping up
their reputation and serving the masses since the past many decades, Coke and Pepsi
both have similar problems, such as having inappropriate ingredients that are not
suitable for different nations, like India, due to the cultural differences. For the sake of
their future growth, these companies are seen to compromise in order to have their
status and figures remaining on the top. Both the drinks continue to confuse the
consumers in the competition of wanting to be the best.

Basic Statistics
When it comes to the essential figures, we have seen that Pepsi has more advantages
whereas coke is getting superior figures. Pepsi wins the game when it comes to making
revenues and creating profit margins and it has been noted that since the past few
months, Pepsi has updated itself more than Coke has. This is an indication that the
investment banks are favoring Pepsi over coke. However, the companies aim to secure
better measures in the future of promising markets which may bring them loss at one
time but in the longer run, there is an increase in the economies of scale.

Success on Individual Basis


Pepsi has had constant growth during its occupancy in a stable pattern that shows
promises of future expansion. Even though the customers do not like the speed of the
pattern, long-term investors favor Pepsi exactly for this reason and therefore, the boost
in price. The company is in their "maturity" state where the product is said to be enjoying
the maximum economies of scale and can carry this success for quite a while, if the right
tactics are used. If a company invests in Pepsi today, by 2015, Pepsi promises to rise
almost 100 points more. You need to be patient when it comes to investing in such
areas of business and to give you satisfaction, you get to see the capital increase over
the years. However, Coca-Cola is not seen to be giving the same fluctuation to the
investors as it changes in a $5 range. This may attract those who believe in fixed income
but since the past decade, no significant rise has been seen nor are there any signs of
possible expansion. Coke has tried to add to its value to the maximum but it is feared to
experience diseconomies of scales sometime in the near future.

Marketing Strategies
Pepsi is expanding itself by focusing on CEO's that are of different cultures and this is
the reason it is being a step ahead of Coca-Cola. Coke therefore needs to have different
strategies to gain popularity in different parts of the world and match the steps that Pepsi
is taking.

Compare and Contrast:


While the market generally believes that Coke is on top of the industry, times are
changing for the worse for this company as Pepsi has started becoming more favorable
because:

 The significant increase in the investing market and their different strategies of having
the public on their side
 Pepsi updates itself after an interval of few months to show their stability when it
comes to investors which shows that they are generally financially established.