coke and pepsi paper - 1 Eric Staub Professor Unsal...

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Eric Staub Professor Unsal International Marketing 18 March 2008 Case Study Coke and Pepsi in India Case Coca-Cola and PepsiCo have been competing for a higher market share in India for a couple decades. Coca-Cola was India’s leading soft drink until it left India in 1977. During that year, according to the Foreign Exchange Regulation Act, the government in India required that the Coca-Cola Company give its secret formula for Coke. Coca-cola was reluctant to enter into a 40% partnership with an Indian company and share its technology. Therefore, they stopped its operations and left the country. Coca-Cola re- entered the country in 1993 with plans to take control of the market away from Pepsi and ensure sound investments. Coke was determined to make their products available to more people in isolated or even inaccessible parts of the nation. For the next ten years, coke built strong relationships with Cricket, the thriving cinema and music industry. In fact, “Since 1993, Coca-Cola has invested more than $1 billion throughout India in production facilities, wastewater treatment plants, distribution systems, and marketing equipment, making it one of the country's most important international investors” (Kysar, 2005). In 1988, PepsiCo entered into India, creating a joint venture with the Punjab government-owned Punjab Agro Industrial Corporation and Voltas India Limited. This joint venture sold Lehar Pepsi until 1991, but PepsiCo eventually bought out its partners in 1994. PepsiCo has become the country’s largest selling food and beverage companies. In fact, PepsiCo India and its partners have invested more than $700 million since the company was established in the country in 1988. In 2005, Coca-Cola and PepsiCo held 1
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95% of the market share in terms of soft-drink sales in India. Coca-Cola India's market share was 60.9% compared to PepsiCo India’s 34.1% of the market share. Coca-Cola and PepsiCo account for nearly 80% of the $2 billion soft-drink market in India. Both Coke and Pepsi have an extensive foreign investment. India is a major market for each company. It was quite apparent that, “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” (Center for Management Research). India accounts for a sixth of the world’s population. There are over a billion consumers in India, a growing middle class, and the climate is extremely hot. Moreover, with the lack of presence in regards to the local beverage market, Coke and Pepsi have a great opportunity and stake in the Indian Market. The large population and the low consumption rates of the rural market in India, signifies an opportunity for market
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This note was uploaded on 04/28/2008 for the course INTERNATIO 01 taught by Professor Fahriunsal during the Spring '08 term at Ithaca College.

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coke and pepsi paper - 1 Eric Staub Professor Unsal...

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