Pepsi and Coca-Cola´s Difficulty Entering the Indian Market

For many years, the rest of the world has assumed that India’s governing body is a closed minded regime, avoiding outside investments almost entirely, especially consumer good. This was an obvious obstacle for both Coca-Cola and Pepsi Co. when contemplating entrance into this new market. Although Pepsi had not attempted to enter the market before 1986, Coke had been there many years before, since 1958 but was forced to leave, in 1977, as a result of political actions and policies. This is an obvious example of how political actions and policies can affect, and have affected, the market for soft drinks in India. Therefore, Coca-Cola’s relationship with the Indian government was tarnished, which made it harder for Coke to re-enter. Coca-Cola was worried about the partnership with India that would have drastically cut its equity stake. Also, as a result of this Coca-Cola would have had to hand over its secret formula which had previously been so successful, this could have led to possible confiscation by the Indian government once they had control of their formula and equity shares.

Apparently, Coca-Cola and Pepsi Co. managers had no idea what was in store for them when entering the Indian market and underestimated certain aspects of culture, political and economical differences. Coca-Cola underestimated how, and to what lengths, India’s government would protect their infant industries.

As shown earlier, political actions and policies has definitely had an impact the market for soft drinks in India. The soft drink market in the country of India consists of only six product distinctions. They are cola, cloudy lemon, orange, soda, mango, and clear lemon. India’s government would prefer to ideally protect its local industries ...

... middle of paper ...

...istake. Coca-Cola needed to adapt to India’s common and/or code law for a better relationship with the local government. Also, Coca-Cola was denied entry into the market its first try, unlike Pepsi Co. who beat them into the market by years. This may have been avoided by more insight into how to re-enter a country the corporation had once abandoned. Coca-Cola may also have tried to enter the market more aggressively than its counterpart, Pepsi Co., which may have played a role into why they were denied access to the Indian market the first try.

In retrospect, these corporations both could have done a little more research, observation of the culture and the stability of the government. These things, coupled with complete differences in the market that these two corporations were used to, probably caused most of the issues here that could perhaps been avoided.