7/27/2019 Coca Cola vs Pepsi_finall

1/36

Coca Cola Vs Pepsi in India: The

Battle of Bottles Continues

7/27/2019 Coca Cola vs Pepsi_finall

2/36

Industry Background

Pepsi introduced aerated drinks in India in 1956 and withdrew in

1961

Coca Cola entered in 1961 and withdrew in 1977

Reduce its equity holding to 40%

Share the secret behind the concentrate

7/27/2019 Coca Cola vs Pepsi_finall

3/36

7/27/2019 Coca Cola vs Pepsi_finall

4/36

Cola-Cola is a $19 billon US company based in Atlanta.

The Coca-Cola trademark is considered to be one of the five best

known trademarks in the work also considered the most admired

trademark according to a survey in 1988.

It was developed as a formulation in 1886 by Dr. John Pemberton, a

pharmacist in Atlanta.

In 1919, Ernest Woodruff purchased the Coca-Cola company and by

1923 his son Robert Woodruff took the company to great heights.

7/27/2019 Coca Cola vs Pepsi_finall

5/36

Worldwide Coca-Cola has a market share of 70% in the Cola segment

and about 40% of its market share comes from US alone.

Worldwide 37% of Coca-Colas production was from independently

owned bottlers; 57% from plants with non-controlling interests; and 13%

from plants with controlling interests

7/27/2019 Coca Cola vs Pepsi_finall

6/36

Coca-Cola Brands in India

7/27/2019 Coca Cola vs Pepsi_finall

7/36

7/27/2019 Coca Cola vs Pepsi_finall

8/36

Profile

Was formulated in 1893 in New Bern, North Carolina, by Caleb

Bradham.

Throughout 1950-60 Pepsi s competed on price and sold its

concentrate to bottlers at a price 20% lower than Coca-Cola.

By 1963 Pepsi under the leadership of Donald Kendell diversified

into production of snacks (Frito-lay) and restaurants (Pizza-hut, Taco

Bell, KFC).

As a result of this diversification Pepsi-Cola was renamed PepsiCo.

7/27/2019 Coca Cola vs Pepsi_finall

9/36

The reason for diversification was that the management was of the

opinion that there were synergies possible across these businesses:

chips were supposed to go well with soft drinks, and new fountain

outlets could be opened in restaurants.

Pepsi has a number of powerful brands in its arsenal namely Slice,

Diet Slice, Cherry Pepsi.

7/27/2019 Coca Cola vs Pepsi_finall

10/36

Pepsi Co. Brands in India

7/27/2019 Coca Cola vs Pepsi_finall

11/36

Parle Entered the Market

Parle led by Ramesh Chauhan captured 60% of the market.

Parle soft drinks products Thumps up, Gold Spot, Limca, Citra,

Maaza and Frooti

Competitors

Pure Drinks Campa Cola and Campa Orange from regional

vendors

Dukes and Spencer

7/27/2019 Coca Cola vs Pepsi_finall

12/36

Post 1980 Era - Pepsi

Decade of slow Liberalization

Good Stage for MNCs

Pepsi re-entered the market with tie ups with Punjab Agro andVoltas (Became fully owned subsidiary of PepsiCo in 1991)

Obligations

Agro research set ups

Technology transfer in food and beverage processing

Investments in processing vegetables and grains

Export obligations and facilities for local manufacturers of colaand fruit juice concentrates

7/27/2019 Coca Cola vs Pepsi_finall

13/36

Post 1980 Era Coca Cola

Coca Cola Re entered in 1993 after the liberalization.

Captured 69% of market share after acquiring Parles soft drinks.

Sore relationship between Coca Cola and Parle

Coca cola promoted its own products

Coca Cola was a new brand launch, not a relaunch

Lost market share

Parles market share captured by Pepsi and became the leader in

Indian Market

7/27/2019 Coca Cola vs Pepsi_finall

14/36

Products

In India CSDs were largely distributed in returnable glass bottles.This trend was different as in most of the other countries CANSwhere used to served them.

Low economies of scale in Can manufacturing caused high prices for

canned soft drinks almost double.

Introduction of Fountains

1998 Soft Drink Sales

CSDS 61.3%

NCSDs 19.5%

NCSD Liquid and powder form10.4%

7/27/2019 Coca Cola vs Pepsi_finall

15/36

Market Share 1998

Product Market Share(%)

Coca Cola 18

Limca 10

Fanta 8

Thums up 17

TOTAL 55 Approx

Product Market Share(%)

Pepsi Cola 27

Mirinda 10

Teem 1.5

TOTAL 40 Approx

COCA COLA Pepsi CO

7/27/2019 Coca Cola vs Pepsi_finall

16/36

PRODUCT PORTFOLIO

FLAVOR COCA-COLA PEPSI CO

COLA COCA-COLA, THUMS UP* PEPSI COLA

CLOUDED LIME FANTA , LIMCA* SEVEN UP

CLEAR LIME CITRA TEEM

ORANGE FANTA ,GOLD SPOT* MIRINDA

MANGO NSCD MAAZA*

SODA KINLEY EVERSAL

* DENOTES PRODUCT TAKEN FROM PARLE.

7/27/2019 Coca Cola vs Pepsi_finall

17/36

Products Category

SSoft Drinks

Aerated

(CSDs)

Non

Aerated

(NCSDs)

Liquid Base Diluted Fruit Pulp

Carbon dioxide Preservatives

Bottled/Canned/

Tetrapacked

7/27/2019 Coca Cola vs Pepsi_finall

18/36

Indian Soft Drink Market In 1996 Rs 32 Bn 60% CSDs and 20% NCSDs

15% consumption in PET bottles, highest was the consumption in

returnable glass bottles.

Bottling plants were highly capital incentive and highly automated

having the typical filling rate of 600-1200 bottles per minute.

Margins

Bottler 10%

Retailers 20%

Markup due to excise and taxes 40%

7/27/2019 Coca Cola vs Pepsi_finall

19/36

Shares of ThroatLIQUID SHARE OF THROAT(%)

WATER 75

TEA 13.3

COFFEE 1.7

MILK 4.8

CSD 1.8

NCSD .7

SQUASH/POWDERS .7

FRESH LIME JUICE .9

ALCOHOL .3

7/27/2019 Coca Cola vs Pepsi_finall

20/36

Indian Soft Drink MarketMONTH INDEX

January 100

February 150

March 170

April 200

May 220

June 230

July 220

August 200

September 170

October 160

November 150

December 150

Index : January=100

7/27/2019 Coca Cola vs Pepsi_finall

21/36

Supply Chain Structure

Concentrate

Manufacturer

Retailers

Bottler

End Users

Owned by

ConcentrateManufacturer

Franchisees

7/27/2019 Coca Cola vs Pepsi_finall

22/36

Competition

7/27/2019 Coca Cola vs Pepsi_finall

23/36

Competitors in India

In India Coca-Cola held 54% of the market share while Pepsi Co.India had a market share of 40%.

Since Coca-Cola had acquired Thumbs Up, Limca etc. from Parle its

market share had shot up.

Market share of soft drinks brands (as of Jan 1998)

Brand Coca-Cola Brands Pepsi Brands

Coal Segment (60%) Coca-Cola: 17.9%

Thumbs Up: 17.5%

Pepsi: 27.3%

Orange Fanta: 7.9%

Gold Spot: 1.0%

Mirinda: 7.9%

Clouded Lime Limca: 9.4% Teem: 1.5%

Clear Lime Citra: 0.5% 7 Up: 2.5%

7/27/2019 Coca Cola vs Pepsi_finall

24/36

Marketing style of Pepsi Co. Pepsi from the beginning chose to adapt to Indian needs and preferences

by associating itself with local festivals, events, and traditions.

Its strategy was to introduce campaigns made in India and specific to

Indian settings, people, and idioms.

For example it adapted the famous US campaign line Youve got the Rightone baby, Uh-Huh to Yehi hai right choice baby, Aha.

In Chennai it offered a bottle of Pepsi free with idlis, in Kolkata, it linked it

with local cricket, and in Delhi with the festival of Holi.

It adopted an aggressive marketing strategy and positioned itself as a

thing for the youth.

It was also agile in getting a number of events sponsored or in which it had

major presence.

7/27/2019 Coca Cola vs Pepsi_finall

25/36

Cont

It also associated itself with celebrities in its ad campaigns.

7/27/2019 Coca Cola vs Pepsi_finall

26/36

Marketing style of Coca-Cola Initially Coca-Cola campaigned its low key and less aggressive global

ads in India.

From mid 1997, they also started on similar platform as Pepsi andlaunched India specific ads.

They ran a very successful campaign with the theme Eat, Sleep,Drink only Coca-Cola which increased its brand recall from 19.4%in August 1997 to 30.4 % in March 1998.

Realizing the need of having celebrities endorsing its products,

Coca-Cola signed cine stars Amir Khan, Karishma Kapoor and amongcricketers they signed Sourav Ganguly, Anil Kumble etc.

It also positioned its other brands like Thumps Up with a machoimage, Fanta as fun drink, and Limca for anyone taking a breather

7/27/2019 Coca Cola vs Pepsi_finall

27/36

7/27/2019 Coca Cola vs Pepsi_finall

28/36

Key Differences

Category Pepsi Co. Coca-Cola

Advertisement

They worked primarily with ad

agency and they went fornational and regional promotion

They worked with 4 to 5 ad

agencies and most of there adsand they went for national

promotion

Distribution and

Logistics

It operated smaller trucks which

covered shorter routes and they

used half depth crates

It operated large trucks on