Coca Cola India's Thirst for the Rural Market

Details

Themes : Advertising and Promotion
Period : 2002-2004
Organization : Coca Cola India
Pub Date : 2004
Countries : India
Industry : Food & Beverages

Buy Now

Case Code : MKTG081
Case Length : 10 Pages
Price: Rs. 300;

Tools

<< Previous

Acceptability Contd...

In the first commercial the connection of Coke with Thanda was made, in the second one there was a subtle difference, with the shopkeeper asking customers to ask for Thanda instead of Coke, and the third commercial showed that when one asked for Thanda, one would get Coke. Analysts said that all the three commercials succeeded in make rural consumers connect to Coke and increased awareness of the brand among them. Along with TVCs, CCI also launched print advertisements in several regional newspapers.

Future Prospects

CCI claimed all its marketing initiatives were very successful, and as a result, its rural penetration increased from 9% in 2001 to 25% in 2003. CCI also said that volumes from rural markets had increased to 35% in 2003. The company said that it would focus on adding more villages to its distribution network.

For the year 2003, CCI had a target of reaching 0.1 million more villages. Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share.

PepsiCo too had started focusing on the rural market, due to the flat volumes in urban areas. Like CCI, PepsiCo too launched 200 ml bottles priced at Rs. 5. Going one step ahead, PepsiCo slashed the price of its 300 ml bottles to Rs 6/- to boost volumes in urban areas. (Refer Exhibit III for Pepsi Co's rural marketing initiatives.)

In early 2003, CCI announced that it was dropping plans to venture into other beverage businesses. Company sources said that increasing volumes of cola drinks had made the company rethink its plans of launching juice and milk-based beverages. In 2002, CCI had announced plans to launch beverages such as nimbu paani (lemon juice), fruit juice, cold coffee, and iced tea in collaboration with Nestle India.¹⁴

Though CCI was upbeat on account of its early success in its drive to capture the rural market, the question was whether the company would be able to take this success further. A major media setback occurred in August 2003, when the Delhi-based Center for Science and Environment announced that it had found high pesticide content in soft drinks manufactured and sold by both cola majors¹⁵.

Around same time BBC Radio in its program - 'Face the Facts' alleged that Coke's plant in Kerala was making excessive use of groundwater resources in the region and was also contaminating the groundwater through discharge of toxic elements, thereby harming the land, water resources and also the food chain in the region.

Though CCI refuted these allegations, the company reportedly experienced a considerable decline in sales after August 2003. With many social and political groups becoming active against the cola companies in rural areas, it remains to be seen whether CCI will be able to quench its thirst for the rural market.

Exhibits

Exhibit I: CCI
Exhibit II: The Rural Market in India
Exhibit III: Pepsico's Rural Marketing Initiatives

14] Wholly owned Indian subsidiary of Swiss FMCG major Nestle.
15] In the light of the allegations, Government of India constituted a Joint Parliamentary Committee headed by Sharad Pawar to investigate the issue.