THE COCA-COLA STORY

Coca-Cola, reentered India in 1993, after having withdrawn from the country in the
late 1970s, in the wake of the Foreign Exchange Regulation Act (FERA) of 1973.
Coca-Cola's reentry was driven both by competitive factors and the company's own
global plans. Global rival Pepsi had entered India in 1990 and by 1993 had captured
a 25% market share.

Coca-Cola could not stay behind. Coca-Cola's exit from the country in 1977, after a
25-year presence, had been discordant. Following the introduction of FERA, the
Reserve Bank of India (RBI) asked multinationals operating in non-strategic
industries like consumer goods to reduce their equity stake to 40% or below. Coca-
Cola offered to hold 40% equity in its bottling and distribution units, but refused to
dilute equity in its technical and administrative unit.

As the FERA regulations did not permit more than a 40% holding in all operations,
the company decided to wind up its Indian operations. After reentering India, Coca-
Cola encountered problems one after the other.

The company focused on establishing the Coke brand quickly, believing that its
international image was well entrenched in the minds of the Indian consumers.
However, the emergence of many local soft drink brands since the time it had left
India and competition from Pepsi, made things difficult for Coca-Cola. To gain a
quick entry into the market and neutralize Pepsi's early mover advantage, CCI
decided to buy out a local soft drink company, Parle in 1993.

Parle's popular brands like Thums Up, Limca, Maaza, Citra and Gold Spot had a 60%
market share. Between 1993 and 2000, CCI had five presidents, a clear reflection of
the difficulties which the company faced in navigating through a challenging,
unfamiliar business environment. During the tenure of the founding CEO, Jayadev
Raja (1992-May 1995) and his successor, Richard Nicholas (June 1995- March 1997),
the company struggled to establish itself. It was also criticized for neglecting the
Parle brands. Donald Short (April 1997-November 1999) streamlined the bottling
operations and the supply chain.

Marketing Strategy

In the early 2003, CCI's marketing strategy had three planks:

• Acceptability by ensuring pervasive presence through right merchandising in retail
outlets.
• Availability by ensuring presence within the consumer's reach.
• Affordability by ensuring relevant price points.

In the late 1990s, CCI decided to customize its marketing strategy for different
regions and target customers. In each region, the dominant brand enjoyed all
privileges while the other brands were supported according to their market share in
that region...
CARBONATED SOFT DRINK

Coke's carbonated beverages business in India comprised the cola drinks Coke and
Thums Up, the orange flavored Fanta, clear lime Sprite, clouded lemon drink Limca
and the energy drink Shock. Coke targeted youngsters in the 15 to 22 age group
and was positioned across campaigns as the real refresher with the tag line "The
real thing, the real refresher"...

Non-Carbonated Soft Drinks

The idea of branching out into non-carbonated beverages was part of a larger
objective of being present in all segments of the non-alcoholic beverage market,
which Coca-Cola practised worldwide...

Advertising and Sales Promotion

In the late 1990s, CCI identified four major passions of Indian consumers - music,
popular sports events, food and movies.

Coke even had its own template - Eat Cricket (or Movies or Music) Sleep Cricket ,
Drink Only Coca-Cola - for connecting its brand with the four obsessions...

DISTRIBUTION

To reach India's 300 million soft drink consumers, CCI distributed its products in
over 700,000 retail outlets serviced through trucks, converted three-wheelers,
tricycles and pushcarts. In the urban areas, CCI moved bottles directly from the
plant to the retail outlets. However, in the rural areas, the company used a three-tier
hub-and-spoke distribution model to ensure deeper penetration...