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The Coca-Cola Company first entered the Indian market in 1956. The history of Coca-Cola in India is full of good and bad moments.
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In 1977, Coca-Cola dramatically exited the Indian market so that it didn’t have to disclose its secret formula to the Indian government.
Backstory: After gaining independence, India looked to gain control over international corporations operating in India.They passed a law called the Foreign Exchange Regulation Act (FERA) in 1973. FERA gave India the power they were seeking.
FERA’s requirements: The law forced foreign companies to sell 60% of their stake to Indian investors. Companies were also required to disclose proprietary knowledge like manufacturing techniques and formulas.
The Secret Formula dilemma: The Coca-Cola Company had to choose between sharing its secret formula or leaving the Indian market. The secret formula was considered crucial to Coca-Cola’s global success. A trade secret that we were not willing to give up.
Coca-Cola’s decision: In 1977, Coca-Cola chose to cease operations in India. Nobody saw it coming; the decision was seen as dramatic and unexpected.
The void: Coca-Cola’s departure left a significant void in India’s soda market. Coca-Cola was a popular part of Indian social life.
However, the departure did create market opportunities for home-grown brands like Thumbs Up.
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The Indian Cola Wars was ignited by Coca-Cola’s 1993 re-entry into the Indian market, which pitted it against its rival, Pepsi.
Before the war: Economic reforms in India eased market regulations to market to foreign companies.
Pepsi entered the market in 1989. Coca-Cola re-entered the Indian market shortly after in 1993.
The cola wars begin: Intense competition began between Coca-Cola and Pepsi, known as the “Indian Cola Wars.” A name synonymous with the cola wars where the two giants were fighting it out in the USA.
Marketing, branding, promotions, and slogans would be their weapons.
Marketing strategies:
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Product strategies:
Acquired by Coca-Cola in the 1990s, Thums Up defied expectations by becoming India’s leading cola brand.
The acquisition: When Coca-Cola returned to India in the 90s, it decided to acquire Thums Up.
Thums Up was a local cola competitor that had become the number one cola drink in India after Coca-Cola left the country.
Many found the decision surprising. Especially since the parent company promoted Thums Up over Coca-Cola.
Why they did it: Thums Up was known to have a bold and masculine image. Whereas Coca-Cola had a universal appeal. Indian men preferred stronger flavors.
Coca-Cola would continue to use the famous “Taste the Thunder” slogan and daredevil advertising in their campaigns.
Market Performance: Thums Up helped Coke compete against Pepsi.
The beverage would continue to grow and stay at number one in cola sales.
In 2003, Coca-Cola’s environmental NGO reported high levels of pesticide residues in their soft drinks.
The scandal: The Centre for Science and Environment (CSE), released a study in 2003, reporting high levels of pesticide residues in Coca-Cola and other soft drinks in India. Claiming that pesticide levels in Coca-Cola far exceeded healthy levels.
This revelation sent shockwaves through the country and tarnished Coca-Cola’s reputation.
Coca-Cola’s response: The Coca-Cola Company immediately defended its products. They cited rigorous quality control procedures and approvals from international regulatory bodies. And referenced independent tests conducted outside India.
They insisted the allegations were unfounded, vowing to clear their name.
Sales plummet: The controversy led to a significant drop in Coca-Cola’s sales in India. Public perception was broken. The brand image shifted from a symbol of fun and refreshment to one associated with potential health risks.
Coca-Cola went under intense public and media scrutiny in India. It became a major obstacle for Coca-Cola’s expansion plans in the nation.
In 2004, after years of protests by local villagers in Plachimada, Kerala, India—a Coca-Cola bottling plant was forced to shut down.
What happened?: Coca-Cola plant’s alleged overexploitation and contamination of local water resources.
Allegations against Coca-Cola: The over-extraction of groundwater caused water shortages. The bottling plant contaminated the surviving groundwater with toxins.
Impact on the local community:
Community response: The villagers organized protests, sit-ins, and marches. The grassroots activism gained lots of media attention in the Indian press and globally.
Outcome: In 2004, the government forced the Coca-Cola plant in Plachimada to shut down.
It was viewed as a victory of local community activism over a giant international corporation. It also highlighted issues of corporate responsibility and drew attention to local water rights.
This conflict is often referred to as a “David vs. Goliath” battle, emphasizing the power imbalance between the local villagers and the global corporation.
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