Cola majors – India firmly on radar
It’s that time of the year for Coca-Cola and Pepsi: Infamous Indian summer is just around the corner and cola companies in this geographically wide market react to the weather, with temperatures reaching up to 42–45 degree Celsius during the four month (April – July) period. In an early move, before the onset of summer, Coca-Cola India has decided to reduce prices for its 200 ml returnable glass bottle. The price of Coke bottles will be cut by INR 2 to a uniform Rs 8 across the country. Competitor Pepsi may do the same as the 200 ml glass bottle segment is very price-sensitive as most of its sales come from rural areas and small towns. Glass bottles account for around 35 percent of sales, PET bottles account for 63 percent and cans for 2 percent of total cola sales in the country.
Current per head consumption of cola in India is abysmally low and both cola majors are keen to encash on the opportunity of rising disposable income, changing lifestyle and increased urbanization. The total carbonated soft drinks market in India is estimated at INR 130 billion (about EUR 2 billion).
Among the carbonated soft drinks in India, Thums Up (15 % market share) is the leading carbonated beverage, followed by Sprite (14.7 %), Pepsi (13–14 %), Limca (12 %) and Fanta (10 %). Coca-Cola is at sixth place with its share a tad below 10 percent. The Thums Up brand is owned by Coca-Cola, which had acquired it from Parle, when the company entered India in 1993.
Coca-Cola
Coca-Cola has announced an investment of USD 2 billion in Indian operations in the next five years, beginning 2012. This would be the largest investment by Coca-Cola in India since its second entry in the market in 1993.
According to a company statement “Coca-Cola India and its bottling partners will invest the funds in consumer marketing and brand-building activities in the country. The company and its parents are also planning to invest in expansion of distribution and cold drink equipment placement and development of manufacturing capacity in India.”
Pepsi
Pepsi was the first cola major to enter the Indian market in 1989. The company has invested around USD 1.6 billion in its Indian operations in 23 years of operations in the country. Pepsi became a common synonym for cola in India after having the market to itself for more than three years until 1993, when Coke entered the sub-continent. Marketing blitzkrieg helped the company to occupy the top spot in cola category. However, this spot was taken by Coke’s Thums Up later.
India born PepsiCo Chairwoman and CEO Indra Nooyi says her company will invest aggressively in emerging markets including the subcontinent. Pursuing its global strategy of focusing on emerging markets, Indian business was elevated to regional status in 2008. Currently, the India region reports to the Asia, West Asia East and Africa Division, one of the two divisions comprising PepsiCo International.
In 2009 Indra Nooyi had announced that PepsiCo would invest USD 500 million in its India operations over a period of three years and triple its revenues in a five-year period. The investment was meant for augmenting manufacturing capacity and for developing market infrastructure and new products.
