Coke and Pepsi Learn to Compete in India

Coke and Pepsi Learn to Compete in India

Section 1:

During the 1900s and the beginning of the new millennium India’s government had opened its doors wide open to foreign investors, but the Coca-Cola Corporation and PepsiCo experienced many difficult challenges. Both companies were engulfed with unexpected problems and difficult situations that led to the recognition that India’s market was very different and special knowledge, skills and local expertise was needed to be obtained if the two companies were to succeed. As Ronald McEachern, PepsiCo’s Asia chief, stated, “India is the beverage battlefield”.

In 1991, India was in an economic crisis that was triggered by the rise in imported oil prices following the first Gulf War. During this crisis, foreign exchange reserves fell, imports were more tightly controlled, industrial production fell, and inflation was continuously rising. Led by Prime Minister Narasimha Rao, dramatic measures were put in place to stabilize the economy for the short term. By 1994, inflation was halved and foreign investors viewed India as a leading Big Emerging Market. Foreign Investment also increased dramatically following the New Industrial Policy which dismantled complicated trade rules and regulations.

Coca-Cola also entered India as a joint venture but later petitioned to create a one hundred percent owned company, Coca-Cola India. Coca-Cola’s entrance caused a major threat to the small producers. As a result, many individual local producers tried to align themselves with Coca-Cola, which later turned into a joint venture between Parle and Coca-Cola.

In India, there are two main high seasons for the consumption of soft drinks. First being the summer session which lasts about seventy-fi...

... middle of paper ...

...minds of the world’s consumers.

Coca-Cola India has made significant investments to build and continually consolidate its business in the country, including new production facilities, waste water treatment plants, distribution systems, and marketing channels.

The Company has shaken up the Indian carbonated drinks market greatly, giving consumers the pleasure of world-class drinks to fill up their hydration, refreshment, and nutrition needs. It has also been instrumental in giving an exponential growth to the country’s job listings.

With virtually all the goods and services required to produce and market Coca-Cola being made in India, the business system of the Company directly employs approximately 6,000 people, and indirectly creates employment for more than 125,000 people in related industries through its vast procurement, supply, and distribution system.