The Coke Pepsi Rivalry

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The Players

Coke had entered the Indian soft drinks market way back in the 1970s. The company was the market leader till 1977, when it had to exit the country following policy changes regarding MNCs operating in India. Over the next few years, a host of local brands emerged such as Campa Cola, Thumps Up, Gold Spot and Limca etc. However, with the entry of Pepsi and Coke in the 1990s, almost the entire market went under their control. Making billions from selling carbonated/colored/sweetened water for over 100 years, Coke and Pepsi had emerged as truly global brands. Coke was born 11 years before Pepsi in 1887 and, a century later it still maintained its lead in the global cola market. Pepsi, having always been number two, kept trying harder and harder to beat Coke at its own game. In this never-ending duel, there was always a new battlefront opening up somewhere. In India the battle was more intense, as India was one of the very few areas where Pepsi was the leader in the cola segment. Coke re-entered India in 1993 and soon entered into a deal with Parle, which had a 60% market share in the soft drinks segment with its brands Limca, Thums Up and Gold Spot.

Following this, Coke turned into the absolute market leader overnight. The company also acquired Cadbury Schweppes' soft drink brands Crush, Canada Dry and Sport Cola in early 1999.

Coke was mainly a franchisee-driven operation with the company supplying its soft drink concentrate to its bottlers around the world. Pepsi took the more capital-intensive route of owning and running its own bottling factories alongside those of its franchisees. Over half of Pepsi's sales were made by its own bottling units.

Though Pepsi had a lead over Coke, having come in before the era of economic liberalization in India, it had to spend the early years fighting the bureaucracy and Parle's Ramesh Chuahan every step of the way. Pepsi targeted the youth and seemed to have struck a right chord with the market. Its performance was praiseworthy, while Coke had to struggle to a certain extent to get its act right. In a span of 7 years of its operations in the county, Coke changed its CEO four times. Media reports about the troubles faced by Coke and the corrective measures it adopted were aplenty.

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