Coke and Pepsi: A Competitive Analysis of the Indian Market Entry

This case study examines the competitive strategies of PepsiCo and Coca-Cola in the Indian market. PepsiCo entered India in 1986, initially collaborating with Voltas and Punjab Agro, and adopted a 'think local-act local' approach, demonstrated by its Navratri festival promotions. This strategy, along with introducing Aquafina mineral water amidst declining soft drink popularity, gave PepsiCo an edge. Coca-Cola's later re-entry in 1990, after an initial attempt in 1958, resulted in reported losses. PepsiCo's early market presence allowed it to build brand recognition, establish distribution networks, and adapt advertising to connect with Indian consumers effectively. Furthermore, PepsiCo's transparent handling of pesticide concerns enhanced its reputation. The case highlights the importance of market entry timing and localized strategies for success in the Indian market. Desklib provides students access to solved assignments and past papers for similar case studies.

Running head: BUSINESS ADMINISTRATION
Business Administration
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1BUSINESS ADMINISTRATION
Answer 1: PepsiCo ventured into the Indian market in 1986 under the name Pepsi Food
Ltd. in a collaboration with Voltas and Punjab Agro. In India the demand for soft drinks increase
during the festival of Navratri (Nav which implies nine and ratri which means night) in Gujrat. In
response to this, Pepsi developed a business plan of think local- act local and tried to include the
people of Gujarat with ‘Thums Up Toofani Ramjhat’ by doling out a free pass with a bottle of
Thums Up. PepsiCo also participated in Navratri festive celebrations through huge sponsorships
of ‘garba’ (a dance that is integral to Nav Ratri) competitions across Gujrat. It also tied up with
the Gujrati TV channel Zee Alpha to telecast ‘Navratri Utsav’ (Utsav implies festival) on all nine
nights. PepsiCo also introduced an offer for the people of Baroda, Ahmedabad, Gujrat and Surat
(the four states of Gujarat) wherein everyone who refilled a bottle of Pepsi 300 ml, was given
one kg of premium quality Basmati rice for free. If PepsiCo always adopts this principle of think
local-act local, then in the end it would amass great wealth and be more popular than Coca Cola
in India. Due to the declining popularity of soft drinks in India, PepsiCo focused on non-
carbonated drinks and introduced a bottle of mineral water called Aquafina while Coca Cola did
the same and introduced Kinley, a bottle of mineral water. Aquafina is more popular than Kinley
in India and is one of the top three retail brands of water in India. This shows that even if there is
a decline in the consumption of soft drinks in India, PepsiCo will continue to earn revenue from
its bottled mineral water. Thus Pepsi has a better prospect of earning revenue than Coca Cola in
India. In addition, when both PepsiCo and Coca Cola was going through a turbulent time in India
in the wake of pesticides being found in their carbonated beverages, PepsiCo acknowledged the
problem and took full responsibility of it but said that the amount of pesticides found in their soft
drinks was negligible as compared to the amount of pesticides that were permissible and present
in a cup of tea. This attitude of PepsiCo of admitting and taking full responsibility of a situation

2BUSINESS ADMINISTRATION
will hold them in good stead in the future and if they continue to follow this policy of honesty
and transparency then PepsiCo is bound to succeed in India.
Answer 2. The timing of entry into any market is extremely pertinent because it has an
effect on the success of a company. Coca Cola entered the Indian market in 1958 and withdrew
from India in 1977. PepsiCo entered the Indian market in 1986 while CocaCola reentered the
Indian market in 1990. Pepsi was working in the Indian market for four years when Coca-Coa
reentered the market. The fact that PepsiCo was working in the Indian market for four years
before Coca Cola entered the Indian market was advantageous for Pepsi and gave PepsiCo an
edge over Coca Cola because PepsiCo had learnt about the conditions of the local market in
India, understood the psyche and sentiments of the people of India, was ahead in creating a
strong distribution network and had established a good relationship with the Indian government.
Since PepsiCo was early in entering the Indian market, it had more time to build its brand and
promote its products among Indians and occupy a substantial share of the Indian market.
PepsiCo was also able to reach out to the Indian customers by adapting their various
advertisements long before Coca Cola did the same thereby ensuring PepsiCo had a greater
connect with the customers than Coca Cola. To conclude, Coca Cola unfortunately reported a
loss of four hundred million dollars because of its late entrance to the Indian market.