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pharmacist,
created Pepsi-Cola in the late 1890s.
PepsiCo Coco-Cola
23% of global sales 47% of global sales
15% of profit from outside US 80% profit from outside US
Looking for market expansion Presence in profit high markets,
Early in advantage in Myanmar & faster sales growth
Vietnam – 90’s strategy
• Limca was the largest selling brand, cola
was the largest selling flavor accounting for
40 % of the market share Lemon drinks
followed cola with 31 % and orange drinks
had only 19 %.
• 20 Parliamentary Debates
• 15 review Committees
• 5000 articles in Press
• Allegations of PepsiCo and CIA nexus
1986 through 1988
• Indian governments Opposition to foreign capital investment in areas where India lacked
expertise
• Governments concern that PepsiCo's proposal of production of processed food (chips,
fruit drinks, sauces) would displace what are home prepared items and hurt India’s BOP
• Indian Govt. deliberates. Pepsi continues to negotiate
1988
• Indian government and PepsiCo reach an agreement. The conditions were:
• EXIM ratio of 5:1. About $150 million of export to be done over 10 year period
• Soft drink sale limited to 25% of total sales
• Ownership limited to 39.9%
• 75% of soft-drink concentrate to be exported
• The JV will setup agricultural research center
• The company could sell Pepsi Era, 7-Up Era and Miranda Era
• The JV will setup fruit and vegetable processing plants
• Coca-cola applies to re-enter Indian market.
1989
• Cokes application is rejected
• V.P Singh becomes Prime Minister of minority government
1990
• Pepsi begins production of Snack Food. Soft drink production to commence during
summer.
• V.P. Singh expresses concern over FDI. Announces to reexamine PepsiCo agreement.
• US government threatens to impose trade restrictions (under Super 301 legislation)
on India for its negative FDI regulations
• PepsiCo lobbies FOR India. US backs out and pepsi gains goodwill through tax sops
• Pepsi agrees to place a new logo of Lehar with its insignia.
1991
• P.V. Narsimha Rao becomes PM. Promotes FDI and LPG.
• Newly formed Foreign Investment Promotion Board allows 51% foreign ownership
of companies.
Concessions made seem unfavorable only when compared to post-liberalization age.
Considering the points during the ensuing period of PepsiCo's negotiations with India
the concessions seem like a good bet.
Coca-Cola was NOT THANDA with the two latter demands and exited India.
Did they make the right decision seeing how things unraveled for Pepsi?
Consent to divulge its formula for one country would impact a global
stand of Coke. This is a deal breaker. Coca-Cola could not have agreed to
it and are justified to end their India Operations.
The Ninth Avatar:
Ankur Sharma – info@ankursharma.co.in / +91-9886403253
Sriharasha Nagaraj
Sudheendhra M
Mangala N
Shruthi Shridhar
Sujeeth Kumar
Suresh S V
Reuben Thomas
Ajay