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    Coca Cola Vs Pepsi in India: The

    Battle of Bottles Continues

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    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

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    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.

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    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

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    Coca-Cola Brands in India

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    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.

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    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.

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    Pepsi Co. Brands in India

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    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

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    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

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    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

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    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%

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    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

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    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.

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    Products Category

    SSoft Drinks

    Aerated

    (CSDs)

    Non

    Aerated

    (NCSDs)

    Liquid Base Diluted Fruit Pulp

    Carbon dioxide Preservatives

    Bottled/Canned/

    Tetrapacked

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    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%

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    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

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    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

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    Supply Chain Structure

    Concentrate

    Manufacturer

    Retailers

    Bottler

    End Users

    Owned by

    ConcentrateManufacturer

    Franchisees

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    Competition

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    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%

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    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.

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    Cont

    It also associated itself with celebrities in its ad campaigns.

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    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

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    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