Shruti final pepsi report


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Shruti final pepsi report

  2. 2. PrefaceThe beverages sector in India is one of the largest in terms of production,consumption, export & growth prospects. These are two major sectors in thebeverages industry, i.e. Alcoholic Sector & Non Alcoholic Sector.The purpose of this project is to find out the factors that affect the choice ofconsumers when they purchase soft drinks (Non Alcoholic Beverages), thebrands preferred by the consumers for different flavors & about theconsumption pattern for different soft drinks.Chapter one includes the introduction of the beverage industry framework ofIndia beverage industry & explains in detail about the non alcoholicbeverage sector.Chapter two contains objectives of the research study & the researchmethodology used for the project.Chapter three also includes the analysis & interpretation of the researchstudy.Chapter four has various finding, conclusion & suggestions. 2
  3. 3. AcknowledgementFirstly, I thanks the all mighty by the grace of whom. This report wasundertaken and duly completed in time.I take the opportunity to express my profound sense of gratitude and sincereindebt ness to Miss. Amita Singvi, under sympathetic, pains taking, and kindguidance of whom, I was able to complete this repot.I am grateful to Director of our institute Dr. B.P.sharma who enabled me tocomplete this report through their king guidance all the time.I am very thank full to all the faculty member of the institute who helped mea lot in it interpretation of date regarding my report without which this workwould never be completed.I am also thankful to my parents who helped me morally and financially incompletion of this report. 3
  4. 4. Executive summarySoft Drinks Bounces Back After a somewhat subdued performance in 2006 due to a recurrenceof the pesticides controversy, soft drinks sales bounced back strongly torecord double-digit volume growth in 2007. With carbonates growth back ona positive upward curve alongside burgeoning sales of fruit/vegetable juiceand bottles water, soft drinks showed impressive growth in 2007. Off-tradevolumes grew slightly faster than on-trade volumes, driven by higherconsumption of packaged and branded soft drinks at home and on the go.The emergence of supermarkets/hypermarkets, heavy consumer promotionsand various new product launches played a key role in driving off-tradevolume growth.Bottled Water and Fruit/vegetable Juice Continue to be Star Performers Soft drinks sales in 2007 were propelled by bottled water andfruit/vegetable juice with their healthier positioning helping to drive sales ofsoft drinks. While carbonates posted single-digit growth in 2007, reboundingfrom the pesticides controversy of 2006, it was bottled water andfruit/vegetable juice that stormed ahead with high double-digit growth rates.Poor municipal infrastructure for tap water has pushed sales of bulkpackaged water to households. Fruit/vegetable juice is growing as a result ofincreased consumer expenditure on naturally healthy (NH) beverages. Whilefunctional drinks and RTD tea also posted impressive growth in 2007, theywere growing from a very small base and are yet to achieve a critical massin terms of establishing a loyal consumer base. 4
  5. 5. Coca-Cola India and PepsiCo India slip in shares With consumers showing a growing preference for healthier softdrinks such as bottled water and fruit/vegetable juice rather than carbonatesin 2007, the two carbonates giants suffered a marginal decline in share.Although both players embarked on a change in strategy to focus more onnon-carbonated soft drinks in their portfolios, they were unable to maintainshare and lost out slightly too home-grown players Parle Bisleri and DaburIndia. Coca-Cola India launched Minute Maid and pushed the sales of itsjuices while PepsiCo India heavily promoted Tropicana, Aquafina andGatorade during 2007. In addition, Coca-Cola India and PepsiCo Indiaembarked on re-branding themselves as total beverage players and not justcarbonates players.Booming Modern Retail Brings Many Opportunities for Soft DrinksPlayers With the retail scene in India undergoing a rapid metamorphosis withthe establishment of supermarkets/ hypermarkets and convenience stores,soft drinks sales have benefited positively. People in urban areas areincreasingly flocking to supermarkets to pick up specialty items that are notavailable in the kirana stores that are found all over India. Modern retailoutlets have provided soft drinks players with many opportunities to pushtheir brands. Consumer promotions for fruit/vegetable juice and emergingsectors such as RTD tea and functional drinks are driving product sampling.Attractive point-of-sale (PoS) displays and gift packs of concentrates arealso drawing consumer attention in supermarkets/hypermarkets. 5
  6. 6. Healthy Drinks to Drive Forecast Growth Soft drinks is expected to post a strong performance on the back ofincreasing affluence amongst consumers and evolving lifestyles which leadto consumers devoting less time to preparing fresh food and drink at home.Competition from the unorganized sector will diminish gradually asconsumers show greater aversion to buying unpackaged and unbrandedsoft drinks from street vendors due to health and hygiene concerns. Risinghealth consciousness is also expected to drive sales of naturally healthy(NH) soft drinks such as 100% juice and mineral water. In addition, softdrinks such as sports drinks and juice-based carbonates are also expectedto fare well over the forecast period as consumers perceive them to behealthy.Beverage IndustryEMERGING BEVERAGE TRENDS The beverage industry is a shifting landscape as volume leadingcategories such as soft drinks and beer continue to experience shareerosion while functional and health & wellness oriented categories enjoydouble-digit volume growth: • Soft Drinks -3.9% • Domestic Beer -1.2% • Energy Drinks +53% • Bottled Water +25% • RTD Tea +23% • Sports Drinks +19% 6
  7. 7. Industry giants Coca Cola ( and Pepsi( continue to diversify their portfolios, as evidencedwith Coke’s recent acquisitions involving Glaceau’s vitaminwater( and Fuze (, as well asPepsi’s purchase of Izze Natural Soda ( beverages continue to be the hottest segment in beverage,driven by energy drinks (+53% growth in 2006). Red Bull( continues to lead the category, but challengersMonster ( and Rockstar( are realizing share leadership in selectmarkets.Bottled water is experiencing resurgence, +25% versus year ago, and issecond only to energy drinks in volume growth. Segment growth is drivenlargely by the introduction of enhanced/fortified/flavored waters, led byGlaceau’s vitaminwater but featuring a slew of new entrants including:Metromint (, Hint (,Propel Fitness Water (, SoBe Lifewater (, Aquafina Alive (, among manyothers.RTD tea is riding the antioxidant wave to 23% volume growth versus prioryear, driven by consumers growing awareness of the health benefitsassociated with antioxidants. Arizona ( leadsthe category, followed by Lipton ( and Snapple ( brands. Organic RTD tea brands are a growing marketniche led by Honest Tea ( and Republic of Tea( 7
  8. 8. The “super-fruits” continue to capture the attention of health and wellnessenthusiasts, offering significant doses of antioxidants and other elementsthat address myriad health concerns. Pom Wonderful( led the super-fruit movement with itspomegranate blends and unique packaging and merchandising. Bossa Nova( and Sambazon ( the powerful Acai berry from South American rain forests.Innovation continues to drive the beverage industry. Let Power Brands helpyou bring your beverage brand to life! 8
  9. 9. CONTENTS1) Preface…………………………………………………………..2) Acknowledgement……………………………………………....3) Executive Summary……………………………………………..4) Introduction……………………………………………………..5) Company Profile……………………………………………….6) Research Methodology………………………………………...7) Data Analysis & Interpretation………………………………..8) Conclusion & Recommendations………………………………9) Appendix……………………………………………………….10) Bibliography…………………………………………………… 9
  10. 10. PROJECT BACKGROUND - Beverage Market 10
  11. 11. The Indian Beverage Market India’s one billion people, growing middle class, and low per capitaconsumption of soft drinks made it a highly contested prize in the globalCSD market in the early twenty-first century. Ten percent of the country’spopulation lived in urban areas or large cities and drank ten bottles of sodaper year while the vast remainder lived in rural an eras, villages, and smalltowns where annual per capita consumption were less than four bottles.Coke and Pepsi dominated the market and together had a consolidatedmarket share above 95%. While soft drinks were once considered productsonly for the affluent, by 2003 91% of sales were made to the lower, middleand upper middle classes. Soft drink sales in India grew 76% between 1998and 2002, from 5,670 million bottles to over 10,000 million and wereexpected to grow at least 10% per year through 2012.2 8 In spite of thisgrowth, annual per capita consumption was only 6 bottles versus 17 inPakistan, 73 in Thailand, 173 in the Philippines and 800 in the United States. With its large population and low consumption, the rural marketrepresented a significant opportunity for penetration and a criticalbattleground for market dominance. In 2001, Coca-Cola recognized that tocompete with traditional refreshments including lemon water, green coconutwater, fruit juices, tea, and lassi, competitive pricing was essential. Inresponse, Coke launched a smaller bottle priced at almost 50% of thetraditional package. 11
  12. 12. INDIAN HISTORY India is home to one of the most ancient cultures in the world datingback over 5000 years. At the beginning of the twenty-first century, twenty-six different languages were spoken across India, 30% of the populationknew English, and greater than 40% were illiterate. At this time, the nationwas in the midst of great transition and the dichotomy between the old Indiaand the new was stark. Remnants of the caste system existed alongside theworld’s top engineering schools and growing metropolises as the historicallyagricultural economy shifted into the services sector. In the process, Indiahad created the world’s largest middle class, second only to China. A British colony since 1769 when the East India Company gainedcontrol of all European trade in the nation, India gained its independence in1947 under Mahatma Ghandi and his principles of non-violence and self-reliance. In the decades that followed, self-reliance was taken to theextreme as many Indians believed that economic independence wasnecessary to be truly independent. As a result, the economy wasincreasingly regulated and many sectors were restricted to the publicsector. This movement reached its peak in 1977 when the Janta partygovernment came to power and Coca-Cola was thrown out of the country.In 1991, the first generation of economic reforms was introduced andliberalization began. STORY OF SOFT DRINKS 12
  13. 13. Segmentation of soft drinks: The Soft drinks can be segmented on the basis of point of purchaseor on the basis of type of products. The story of soft drinks is fascinating,since the beginning of life the most pressing needs of all living beings is food& sweet juice when cut open, ditto the watermelon & fresh coconuts. ManLearnt the Secrets of these Sources &used them as additional pleasant aiddrinks beside water. As year passed in thousands, man tried to imitatenature in preparing these drinks so as to use them as well. As a result oflaborious Search in 1772, Joseph priestly combined carbon dioxide withwater & artificially produced arched water bubbling with gas spread quickly &artificially produced arched water bubbling with gas spread quickly &parched mouth begin to consume this. The Segmentation on the basis of point of purchase divides themarket into two parts on premise 80% of the Consumption of Soft drinks isdone Premise i.e. restaurants, railway station, cinema hall etc.At Home: The rest of 20% of the market compromises of the soft drinkspurchased for consumption at home.The market can also be segmented on the basis of products. The segmentcould be as follows— This account for 62% of the total soft drinks at all India level. Thebrands that fall in this category are Pepsi, Thums up, Coke. Non-Colasegment, which can be further, divided as orange. This segment has19%share of the total market. Mirinda orange (of Pepsi) Fanta & and GoldSpot (Both of Coke) & crush represent the orange segment.Lime: 13
  14. 14. This segment represents 14% of the total market. Coke’s Limca&Pepsi’s Mirinda fall in this category. The market leader is close to 70% market share of this segment butsprite has considerably cut into this market. Mango, Slice Mangola & Mazais the leading Mango drink. Mango Drinks account for about 3% of the softdrinks market. There is very thin line of difference between the clear &cloudy lime. The most obvious feature is that clear lime has to be bottled ingreen bottles as sunlight harms the drinks & change the taste. 14
  15. 15. THE INDIAN SOFT-DRINK INDUSTRY SCENARIO Domestic firms in India, which once enjoyed the benefits of shelteredmarkets, are increasingly facing competition from global giants in 1990s.Sheltered market had once allowed Indian entrepreneurs to develop strongbrands that have held there own against the onslaught of the multinationalcompanies. Some domestic firms have chosen the strategy of tie-ups withMNC’s. Others have tried to meet the competition head on. Whatever route Indian firms take to deal with competition from MNC’sit is imperative for them to keep track of global strategies of these firms.Often the strategies undertaken at the local level are only part of the globalstrategies, because it is difficult for any firm to allow significant differences inapproach in different markets. Coca-Cola controlled the Indian market until 1977, when the JantaParty beat the Congress party of then Prime Minister Indira Gandhi. Topunish Coca Cola’s principal bottler, a Congress party stalwart and long timeGandhi supporter, the Janta government demanded that Coca Colatransferred its syrup formula to an Indian subsidiary. Coca Cola backed andwithdrew from the country. India now left without both Coca Cola and Pepsi became a protectedmarket. After Coca Cola made its exit from Indian market in1977, there wasa vacuum in the soft drink market, advantage was taken by Parle and Puredrinks. Parley launched “Thumps Up” and gained a substantial and robustmarket share. In 1977 with a change in the government at the centre led to the exitof coke, which preferred to quit rather than dilute its equity to 40% in 15
  16. 16. compliance with the provisions of FERA, the first national cola drink toemerge was Double Seven. In the mean time, Pure Dinks, Delhi, on Coke’sexit switched over to Campa Cola, and, by the end of 1970s, Campa Colawas practically alone in the Cola market. Parle introduced Thumps Up in the beginning of 1980s, followed bythrill by McDowell’s and Double Cola by Double Cola manufacturingCompany (DCMC)-an NRI-run outfit with its plant at Nasik. An additionaldimension to the Indian soft drink industry was that of fruit drinks, whichwere valued at Rs. 40 Crores and among the brands in the market, theleader was Parle’s Fruity with about 40% of the market share. The otherplayers in this segment who have posed challenges to Parle areGodreg(with Jumpin) and Ahemdabad bases Pioma Industries’ Rasna Cola-Cola. Setup in 1949, by 1978, Parle led the Indian soft drinks market with ashare of 33%. Gold Spot and Limca were the clear winners, and later,Thumps Up also started contributing to its growth. Thus, Parley touched amarket share of around 60% in 1990. However, with the arrival of Pepsi,Parle’s share decreased to 53% and Pepsi quickly attained a market shareof about 20 percent. Till 1990, Parle’s chief rival was Pure Drinks, which was steadilylosing out to Parley. After the arrival of Pepsi, the market share of PureDrinks further deteriorated. This was mostly because Pure Drinks hadsmaller number of bottling plants and a limited distribution network – exactlythe same reason why Pepsi could not do much against Parle. Parle had 60bottlers against Pepsi’s 20 and 2.1 lakh retailers against Pepsi’s 1.5 Lakh. Before 1992 , the Indian soft drink industry had not grown fast mostlydue to high excise duties and government encouragement of fruit drinks 16
  17. 17. over carbonated drinks. The Limca was largest selling brand of bottled softdrinks in India, from consumers point of view ‘Cola’ was the most popularflavor. It accounted for about 40 percent of the market. ‘Lime’ and ‘Lemon’drinks followed with about 30 percent, and ‘Orange’ drinks had only about 20percent of the market share. Carbonated soft drinks accounted for the rest10 percent. From 1984 to 1992, the Rs, 1,200 Crore Indian soft drinkindustry grew at an average of 2.5 to 3 percent, the highest being 12.4percent during 1984-1985. Pepsi had begun its efforts in mid 1980s but only in 1990 it was ableto make an entry in the Indian Cola market. In early 1985, the thengovernment rejected a proposal with RPG GROUP. This involved the exportof fruit juice concentrate from Punjab in return for the import of Colaconcentrate. The deal offered was a 3:1 EXIM ratio. The revised proposal made by Pepsi also met lots of resistance. Thestrongest opposition to the proposal came from the food and civil suppliesministry, which argued that India should be promoting fruit juices, notcarbonated soft drinks. Opposition also came from CSIR, one of whoselaboratories developed its own soft drink flavors. After more than 5 years ofacrimonious battles Pepsi was finally launched in India in June 1990. Toobtain the license for India, Pepsi had to export $5 of locally made productsfor every $1 of materials imported, and it had to agree to help the Indiangovernment to initiate a second agricultural revolution. Pepsi has also had totake on Indian partners. Pepsi Co, Punjab Agro Industries Co-Operation(PAIC) and Voltas promoted the project. 17
  18. 18. Pepsi had a very significant first mover advantage in the Indianmarket. It did not have the condition of divestment of 49 per cent equity indownstream ventures attached to it when it received permission to invest inIndia. Pepsi had obtained the government approval for its downstreamventures prior to the FD1 guidelines that made Indian equity holdingmandatory. Thus, in its original clearance, Pepsi was not only allowed tohold 100 per cent equity .in its holding company but was also allowed tocarry out bottling and marketing operations. The government approval, moreover, had allowed Pepsi to earn*out acquisition of assets to expand its business in the country. Pepsi usedthis clause in its approval to buy out 100 per cent stake in some of thedomestic bottling companies including its high profile buyout of GujaratBottling Company, the former Coke franchisee in Ahmedabad. (Industryministry sources have clarified that while Pepsi would be required to seekfresh government approval if it picks up shares in domestic bottlingcompanies as part of its portfolio investment, it does not need suchapproval if the assets are acquired for expansion.) There was now a triangular battle between Parle, Pepsi and PureDrinks. Pepsi launched 250 ml bottles in June 1990 to capture the 250 mlbottle-market of Thums Up (launched in November 1989). As a response,Thums Up ran ads downgrading Pepsis taste and declared that it was afast drink. Thums Up entered the brand war totally with blind taste test ads. Thums Up launched Double Maha Cola, the 500 ml bottle, toprove that bigger is better in cola wars and was again first to introducetakeaway 250 ml bottles for the first time in the Indian cola market. Pepsi 18
  19. 19. got into more trouble when six months after its launch it caughtgovernments attention regarding its commitments. Soon after, a showcause notice was issued to the company for prima facie violation of theconditions stipulated in the letter of intent with regard to the production ofsoft drink concentrate. Coca Cola came back to India after 16 years when it waslaunched on October 24, 1993, at Agra. Coca-Cola was initially wooed bythe Godrej group, Great Eastern Shipping and the Britannia Industries Ltd, ledby Rajan Pillai. In March 1991, it signed an MOU (Memorandum ofUnderstanding) with BIL and this proposal was accepted by theChandrasekhar government. But relationship between the two companiesturned sour over the export-oriented clause and finally on June 23, 1993,Coca Cola got the permission to enter the country with a 100 per centunit in India. On September 22. 1993, the company bought out the Parlebrands. After the second coming, of the international varieties of Cola drinks,the market has witnessed a high-profile tussle between the global giants -Coca-Cola and PepsiCo. This tussle and the respective problems faced bythe two firms in the Indian market are extremely instinctive. PepsiCogained a significant first-mover advantage through its ability to gain earlyaccess to the market. Coke, after a couple of abortive attempts, seemedto have made an entry under ideal conditions in the market. However, itthen faced dissensions within the ranks of its bottlers. Its manner ofdealing with the bottlers seemed to lack Pepsis finesse and Indiaseemed to be one of the rare markets where Pepsi was holding itsown against Coke and consolidating its position. The companies have continued to wage their war in India. Coke,with the strategic move of buying out Parle, gained a huge market share 19
  20. 20. overnight. Hut Pepsi is sparing no efforts to gain a larger share of themarket. The potential in the Indian market is tremendous. The Indianmarket is roughly more than Rs 1,200 crore; moreover, the per capitaconsumption of three bottles in India is lagging way behind the USsastounding 700 bottles per capita consumption. Both Coke and Pepsi have rightly realized that the immediate priority isin expanding the market by increasing the growth rates. The Indian marketaveraged a growth rate of 2.5 per cent between the years 1984-92.From 1992, when the Cola war took a serious turn, the growth rate hasalmost doubled. In 1995 the market grew by 20 per cent in volume term,with estimated sales of 140 million cases (one case :- 24 bottles of 300 mleach) up from 115 million cases in 1994. The industry, prior to 1990, was witnessing sluggish growth rates(CAGR: around 5 per cent) with two domestic players: Parle and PureDrinks. The entry of the cola giants, Coke and Pepsi, led to a rapidexpansion in the size of the market (CAGR for the first half of the 1990s:around 20 per cent). Cokes acquisition of Parle has turned the marketinto a duopoly. Also not only the market size is increasing, there isalso a shift of consumer preference between the different soft drinksegments. Whereas in 1990, cola was accounting for a third of all softdrinks sold, today it accounts for well over a half. 20
  22. 22. In 1902 the Pepsi Cola Company was launched in the back room ofpharmacy and was applied in patent office for a trademark. The businessbegins to grow on June 16, 1903 “Pepsi Cola” was officially registered withthe US patent office. That year Cola sold 7,968 gallons of syrup using themin “exhilarating aids digestion”. It also awarded for franchised to bottle Pepsito independent investors, where number grew from just two in 1905 in citiesof charlotte and Durham, to 15 the following year, and 40 by 1907. Gold Spot is considered as the first branded soft drink in India. It wasintroduced by Parle in early forties. Coca-Cola was the first foreign soft drinkto be introduced in Indian markets. The Coca-Cola Company entered Indiain the early fifties, when four bottling plants were setup at Bombay, Calcutta,Delhi and Kanpur. Coca-Cola enjoyed a good beginning and dominated themarket. Parle exports private Ltd. the major domestic player later in 1970introduced Limca, a lemon soft drink. Before Limca introduction, they hadattentively introduced ‘Cola Pepino’ which was soon with from the market. In July 1977 Coca Cola left India following a public dispute over shareholding structure and import permits. As per FERA regulations the companywas required to indicate or clear operation. Coca-Cola left a big gap, whichwas filled by several companies who came forward pushing different brandsin market. Parle products introduced their cola “Thums Up”; pure drinksintroduced “Campa Cola” along with orange and lemon. Modern Bakeriesintroduced “Double Seven” Thrill “Rush” and “Aprint”. At the same timevarious regional soft brands played an independent role in their respectiveterritories like “Duke” and “Mangola” etc. 22
  23. 23. After Coke was asked to leave India Pepsi began to lay plans to enterthis huge market. Pepsi worked with an Indian business group in seekinggovt. approval for its entry over the objections of both domestic soft drinkcompanies and anti-multinational legislators, Pepsi saw the solution to lie inmaking an offer that Indian Govt. would find hard to refuse. Pepsi offered tohelp India export some of its agricultural products in a volume that wouldcover more than the cost of importing soft drink concentrate. Pepsi alsopromised to focus considerable selling efforts on rural areas to help theireconomic development. Pepsi further offered to transfer food processingpackaging and water treatment to India in the way Pepsi started itsoperations in April 1989 for beverages, snack food and export business. In1990 first Pepsi, Cola was produced in India. PepsiCo entered India in 1989 and in the span of a little more than adecade, has grown to become the countrys largest selling soft drinkscompany. The Company has invested heavily in India making it one of thelargest multinational investors. The group has built an expansive beverage,snack food and exports business and to support the operations are thegroups 39 bottling plants in India, of which 17 are company owned and 22are franchisee owned. PepsiCo stays committed to providing its consumers with top qualitybeverages. Its diverse portfolio of brands include the flagship cola brand -Pepsi; Diet Pepsi; 7Up; Mirinda; Mountain Dew; Slice fruit drink; Tropicanabrand 100% fruit juices in various flavors; Aquafina packaged drinking water;Gatorade plus local brands Lehar Evervess Soda, Dukes Lemonade andMangola. 23
  24. 24. PepsiCo is also a dominant player in the snack food segment in India.PepsiCos snack food company Frito-Lay is the leader in the branded potatochip market. It manufactures Lays Potato Chips; Cheetos extruded snacks,Uncle Chips; traditional namkeen snacks under the Kurkure and Leharbrands; and Quaker Oats. PepsiCo is one of the largest MNC exporters in India and its exportbusiness consist of three categories - agri business, commodities and Pepsisystem sales. PepsiCo has made significant investments with the PunjabAgriculture University to develop a comprehensive agro-technologyProgrammed that has helped thousands of farmers across India improve theyield of their farms and the quality of their agricultural products. PepsiCo hasleveraged its knowledge in contract farming to develop seaweed cultivationin Tamil Nadu and has partnered with the Government of Punjab to helpfarmers of the state through the utilization of developed technology for citrusfarming. As part of its sustainable development initiatives, PepsiCo India hasbeen a committed leader in the promotion of rain water harvesting, waterconservation recycling and the reduction of effluent discharge. PepsiCo hasalso established zero waste centers and PET recycling supply chains andassisted victims of natural disasters. PepsiCo stays dedicated in itsendeavor to develop community outreach programs by supporting ruralwater supply schemes, administering medical camps in villages, providingcomputers to rural schools and creating opportunities for women in ruralareas through vocational training as an alternate means of livelihood. PepsiCo India has worked closely with the Defense forces inrehabilitation of Defense Personnel through projects like Mission Vijay-2. 24
  25. 25. Under this project Pepsi in association with Castrol helped soldiers setbooths in rural area to sell Pepsi and Castrol products there by helping themto not only earn a decent living but to also add some color to their lives.Through this project PepsiCo India also tries to give these soldiersdistribution rights for its soft drinks.It gives PepsiCo India great pleasure in associating with Defense India andSamvedna for an event to bring cheers and smiles for our Jawaans of BSF(Border Security Force) at Wagah. In the next year, 1991 production on Mirinda and 7 Up started. Theproduction of Slice, Teem and Fountain Pepsi started in 1993 Coca-Colacame back again in October 1993 and launched in Agra. It joined hands withParle Export Pvt. Ltd. to enter India and gradually took over the samecompany. The nineties also saw a new foreign entrant called CadburySchmeppes, which rolled out Canada Dry and Crush in Metropolitan cities. Pepsi entered the cloudy lemon category by launching its MirindaLemon in 1998. In may 1999, a notification, presenting the presentation offood Adulteration (Fourth Amendment) rules 1999, allowed the use of theblended artificial sweeteners, as part time and a successful fame potassiumin the formulation of soft drinks, which in what made the entry of diet Pepsiand diet coke. Coca-Cola also rolled out its popular clear lemon drink sprit inIndia at same year, 1999. 25
  26. 26. What’s in Pepsi?Pepsi contains: Carbonated water, High fructose Glucose syrup/or Sugar color, Phosphoricacid, Caffeine, Citric acid and natural flavors.Calories 100Total Fat (gm) 0Sodium (mg) 25Potassium (mg) 10Total Carbohydrates (gm) 27Sugars (gm) 27Protein (gm) 0Caffeine (mg) 25 26
  27. 27. COMPANY STRUCTURE PepsiCo India Holding Ltd. is created by Pepsi Company, to carry outthe sales and marketing operation in India. Mr. Rajiv Bakshi, (G.M. businessunit), heads the Indian Unit. There are three marketing units in India Eastand North, West and South. East & North units are headed by Mr. PrakashAiyer. Each marketing unit is subdivided into state units, and their state unitsare divided into territories. Allahabad territory falls in U.P. unit of East andNorth Marketing unit. Company owned bottling operation (cobo) of U.P. unit comprises ofShare bottling plants at Sathariya (Jaunpur), Jainpur (Kanpur) and Bajpur(Nainital) which supply to six territories at Allahabad, Gorakhpur, Kanpur,Lucknow, Bareilly in U.P. and Uttranchal. This unit is headed by Mr. SaurabhGupta (Unit Manager); he is assisted by Mr.Harsh Rai, Marketing Manager.The other staff in his office is finance controller, finance coordinator, MEMCoordinator, Legal Advisor, Marketing Executive, Accounts Executive andpersonal Executives. Each territory is headed by territory Development Manager (TDM)who is assisted by one or two Accounts Development Coordinators (ADC).The territory developments Manager (TDM) have a team of executives.These executives are Customer executives, Service executives, andAccounts executives. Executive working on Projects Mr. Rohan Arora isTerritory Development Manager (TDM) and Mr. Ajay Nagar is AccountsDevelopment Coordinator (ADC) of Allahabad Territory. The Customerexecutive in this territory is Mr. Subodh Kumar, Mr. Devendra Singh. The 27
  28. 28. Customer Service Executives of this territory is Mr. Raghvendra andAccounts executive is Mr. Neelkamal. Allahabad territory is a big territory covering eastern districts of Allahabad, Varanasi, Mirzapur, Ghazipur, Sonebhadra, Pratapgarh,Bhadoi, Kausambi, Jaunpur etc. There are 72 distributors in this territory.The annual turnover of company in this territory was 3 million crore in2004.The turnover of the company in India was 115 million crore in the sameyear. 28
  29. 29. ORGANISATION CHART Business Unit Manager (India) MUM Marketing Unit Manager MUM (West) (East & North) (South) Unit Manager TDM TDM Territory Development Manager TDM TDM TDM(Kanpur) (Lucknow) (Allahabad) (Gorakhpur) (Barreilly) (Uttranchal) Territory Traini Account Development Coordinator CE CE CE CE CE CE CE (Jaunpur) (Ghazipur) (Mirzapur) (Pratapgarh)(Bhadoi)(Kausambi)(Sonebhadra) CE Customer Executive (Varanasi) (Allahaabd) 29
  30. 30. PEPSICO HEAD QUARTERS Pepsi co India world head Quarters is located in Purchase, N.Y.approximately 45 minutes from New York City. Edward Darrel Stone, One ofAmericas foremost architects, designed the seven-building headquarterscomplex that includes the Donald M.Kendall Sculpture collection in a gardensetting. The collection of works is focused on twentieth century & featureswork by masters such as Auguste Rodin, Henri Laurens, Henry Moore,Alexander Calder, Alberto Giacometti, Arnaldo Pamodoro & ClaesOldenburg. 30
  31. 31. COMPANY’S GLOBAL STRATEGY Set a winner growth goals if you act like number two, you will always be number two. Hiring people who love change and thrive on risk taking. Upset the rules of the market place. . Always anticipate the response you may provoke. Execution of a plan often derive success more then more marketing Encourage Executives to think laterally. Conjure Up those creative tactics to knack fizz out of its competition. 31
  32. 32. PEPSICO MISSIONWe dedicate our efforts to-  In India, only 40% people drinks soft drinks. So the main mission of Pepsi is to capture the Rural Markets to make it a one-man show.  Hiring & training ‘People’ who single handedly drive the business forward.  Providing courteous, prompt & efficient service to our customer.  Building long-term prosperity of our brands in the market place.  Exploring & developing opportunities that helps in building competitive edges. 32
  33. 33. MARKET SIZE AND GROWTH RATE The particular feature of market is that of positioning & targeting ofvarious brands while cola brand of Coke is targeted at teenagers & ispositioned as refreshment for mind & body. The Thums up brand is targetedat people in age group & is positioned as fun drink. Soft Drink market size for Fy00 was around 270mm cases (6480mlbottle). The market, which was witnessing 5-6% growth in the early 1905 &even slower growth at around 2-3% in the late 80s. Presently the marketgrowth has slowed down with growth rate of 7-8 per annum dawn withgrowth rate of 7-8% per annum compared to 22% growth rate in theprevious year. The market size for Fy01 is expected to be 7000mmbottles.The market growth of 22% till last year target still due to high excise duty of40% leading to higher price of the end product. In terms of SKUS the marketis Skewed towards 300ml which constitutes around 80-85% of the marketrest in the form of other pack, Size, But with increasing occasion led & homerefrigeration led consumption the sales of bigger SKU’s like more than 1 literpack size has increased this has led to increase contribution from pet bottlessales up to 75% are in Urban areas. Another skew ness is in terms of the time of the year when theconsumption takes place. Sale of soft of Drinks takes place during summerwhile just 5-6% of the total sales take place in the winter. In summer the highseason starts for 70-75 days, which contributes more than 50% of the totalyear’s sales. 33
  34. 34. BRAND PROFILE PepsiCo Company provides five brands of Soft drinks. In all brands ofPepsi one is Soda, Second Mineral water and other are running successfullyin the market. At present time Pepsi provides two new soft drinks. DewMountain and Blue Pepsi and above marketed with reasonably goodsuccess. They are completely defined below- 1. Pepsi 2. Blue Pepsi 3. Pepsi Diet 4. Miranda (Lemon + Mango) 5. Slice 6. 7up 7. Aquafina 8. Dew Mountain Now here we will discuss about the market shares of each brands of soft drinks. There market share are as follows- 34
  35. 35. Soft Drinks Market Share Pepsi 57% Mirinda (Orange) 16% Mirinda (Lemon) 2% Slice 1.5% Teem Soda Not Available 7UP 1.5% Aquafina 3% Blue Pepsi 2% Dew Mountain 8% Pepsi Diet 6%Quantity Details of all brands of Soft drinks are given as below— SOFT DRINKS Quantity 35
  36. 36. Pepsi 200ml, 300ml, 600ml, 1lt, 2lt. Mirinda Orange 200ml, 300ml, 600ml, 1lt, 2lt Mirinda Lemon 200ml, 300ml, 600ml, 1lt, 2lt Slice 250ml, 500ml 7up 200ml, 300ml, 2lt Teem Soda 300ml, 600ml Pepsi Diet 330ml, 500ml Aquafina 1lt Dew mountain 200ml Blue Pepsi 500ml The PepsiCo company had provided its 300ml bottle softdrinks(B.S.D.) in the month of June 95, 200ml launched in the year of 1999and I lit, 1.5 lit bottle launched in the year 1996 while 500ml and 2 itlaunched in 2000, Mineral water, Aquafina had been launched in the year2001.Dew mountain, Blue Pepsi 200ml, 500, ml, has been launched in the year2003. 36
  37. 37. PEPSI DISTRIBUTION CHANNEL Pepsis main strategy is to operate franchisee (Franchisees ownedBottling operation). Pepsi indulges mainly in direct contribution lo retailerand resorts to indirect in certain areas. Pepsi distributes through threechannels which is shown below: PEPSI BOTTLING PLANT WAREHOUSE FRANCHISEE DEALERS RETAILERS CONVENTIONAL NON-CONVENTIONAL RETAILERS RETAILERSThere is no involvement of wholesalers in the distribution of products. It ismore like an agent network. The companies have divided the country intovarious regions and established a franchisee in each region. Thefranchisees have their own bottling plants and manage all the day to dayoperations. 37
  38. 38. PACKAGING Packaging plays a vital role in increasing decreasing in the sales ofthe products. Thus, packaging of the product should be attractive andproduct should be available in different sizes. To keep in mind the importance of packaging PepsiCo and Coca colais adopting new technology for looking the products attractive and producingthe product in different size. The different pack sizes available are 200 ml,300 ml, 330 ml (Can), 600 ml (promotional pack with 100 ml extra), I liters.,1.5 liters., 2 liters., and 200 ml / 250 ml (slice).RANGES OF DIFFERENT PACK AVAILABLE 1. GLASS – 200 ml, 300 ml, 1 liter and 250 ml. 2. PET - 500 ml, 600 ml, 1 liter and 2 liter. 3. TETRA - 200 ml (SLICE) 4. CANS - 330 mlIN GLASS • 24 Bottles * 200 ml = 1 Case • 24 Bottles * 250 ml = 1 Case • 24 Bottles * 300 ml = 1 Case • 6 Bottles * 1000 ml = 1 CaseIN PET • 24 Bottles * 500/600 ml = 1 cartoons • 12 Bottles * 1000 ml = 1 cartoons • 9 Bottles * 2000 ml = 1 cartoons • 12 Bottles * 1500 ml = 1 cartoonsTETRA • 24 Bottles * 200 ml = 1 CaseCANS • 24 cans * 330 ml = 1 Case 38
  39. 39. ADVERTISING STRATEGIES ADOPTED BY AERATED SOFT DRINKINDUSTRY Soft drinks is perhaps the most hard fought product categories inIndia in every respect - media, events, distribution, pricing, communication,endorsements and so on... Every year it consistently emerges as one of thetop 10 categories on television. We, at AdEx India, have looked at year 2003to understand the year that was for this exceptionally competitive segment! One clear and predictable pattern in 2003 was the two clear peaks ofad spend - one during the world cup and the other during the festive time.Interestingly, while Pepsi dominated media budgets during World Cup,Coca-Cola seems to have been the dominant spender in the month ofSeptember. However, this time we at AdEx thought of dwelling on aspects ofadvertising in terms of strategy adopted by the different players in thiscategory and the duration of advertising across genres on TV and press.This paper tries to throw some light on the following aspects: - • Genre wise and channel wise composition of advertising on TV • Advertising strategy adopted by the aerated soft drink players on TV and press • Zone wise and genre wise advertising on press • Specific case: zone wise and genre wise advertising for Pepsi and Coke 39
  40. 40. Genre wise analysis on aerated drinks establishes that this category isheavily advertised on feature films, music, cricket and soaps. Major part ofthe advertising on Cricket can be attributed to the fact that Pepsi was theofficial sponsor of the Cricket World Cup 2003. However, apart from cricketPepsi is actively present on other types of sports such as soccer, wrestlingetc. 40
  41. 41. FIGHT FOR THE MARKET SHARES With the cola majors busy sharpening their arsenal, its a pitched battle all the way -- whether on television or in the marketplace. According to figures released by IMRB, in the month of January--February, the combined market share of all carbonated soft drinks (CSD)beverages under PepsiCos domestic product portfolio - including Pepsi,Mirinda Orange, Mirinda Lemon and 7 Up -- stands at 48.3 per cent. TheIMRB data adds that with the exception of Mirinda Lemon, all PepsiCobeverages have led over Coca-Colas brands in terms of market share in thisperiod. However, when contacted by Business Line, Coca-Colas officialspokesperson disagreed with these figures. According to ORG-MARG, whichtracks market figures for Coca-Cola India, the combined market share of allCoca-Cola brands put together stands at 58 per cent. While declining toprovide individual market share of brands under the companys portfolio,Coca Cola Indias official spokesperson sa1d, "We do not agree with thefigures given by PepsiCo. If our turnover last year was almost double theirs,how can their market shares be higher? The market shares they are statingare obviously questionable." Pepsis official spokesperson reiterated that among colas, whichoccupy close to 70 per cent of the approximately 270-millioncases CSDmarket, Brand Pepsis market share stands at 51 per cent. The combinedmarket shares of Coca-Cola and Thums Up stands at 49 per cent, accordingto IMRB. 41
  42. 42. In the carbonated orange segment, which accounts for roughly 15 percent of the overall CSD market, the market share for Mirinda Orange hasbeen estimated at 53 per cent by IMRB. The market share of Coca-ColasFanta brand is estimated at 47 per cent. In the cloudy lemon segment, which accounts for roughly 10 per centof the CSD market, Coca-Colas Limca brand leads PepsiCos MirindaLemon by a huge margin. Limca has a 75 per cent size of this segment,while the share of Mirinda Lemon is 25 per cent. According to industryestimates; the share of the cloudy lemon segment has slipped below that ofthe orange segment. Interestingly, the cloudy lemon segment does not existin most developed markets, and is primarily a developing countryphenomenon. 42
  43. 43. PEPSICO: SOON TO HIT $ 1-BILLION MARK IN INDIA PepsiCo will soon join the elite band of companies with $l-billion sales inIndia. The company currently has sales of $700 million. Since 1989 the $27-billion food and beverages giant has invested $700 million in India and seen asteady double-digit growth in its volumes. The Indian operations are the Atlantabased company’s: fifth largest outside the US now. "We are on track to make it the second or third largest," SteveReinemund, chairman & CEO PepsiCo told the media in New Delhi.Reinemunds visit was preceded by that of E Neville Isdell, chairman of theboard and CEO of The Coca Cola Company, who chose to visit India on takingcharge of Cokes global operations a few months ago. Reinemund said PepsiCos Rs5-per-packaffor_bility strategy initiated byCoke and Pepsi had worked well in India and helped the company increase itsconsumer base from 150 million to 250 million. He said with the strategyPepsiCo had attained critical mass. "It is time now to increase the depth ofconsumption," he says. However, he admitted that the company was forced to hike its pricesrecently as there was an affordability challenge all over the world. "We havelearnt this lesson and reverted to higher price points (in India) after havingachieved our objective of 150 million consumer footprints. We do not see anydepth in our future pricing and therefore, we have changed our strategy." 43
  44. 44. Pepsi Co is now making operating profits in India and its exports areworth over $60 million, up from just $3 million in 1991. Reinemund wasespecially upbeat about the companys snacks business Frito Lay, in India,which he said was the fastest growing segment for five consecutive years. "Indiais clearly one of our priority markets," he said. Extolling Indian corporate talent, Reinemund said PepsiCo India wasbeing run without any expatriates and40 officials from the Indian operations hadso far been placed in the companys global businesses.” We are planning asignificant increase in our manpower exports from India," he said. He saidPepsiCo employed more than 4,000 people in India directly and over 60,000indirectly with its concept of contract farmiJ1g in India. It has relationships withover 2,000 farmers. The company introduced farmers in India to six high-yieldpotato varieties and helped development of new seeds which helped increasethe total annual production of tomatoes from 28,000 tones to over 250,000 tonesin Punjab. The company had no plans to make any structural changes in India saidReinemund, since of the 37 bottling plants in the country, 17 company-ownedbottling plants accounted for 55 per cent of total production. He dismissedreports that arch rival Coke was closing in on the sales of Pepsi products andsaid Pepsis leadership position was because Indians loved its products. Reinemund met finance minister P Chidambaram and planningcommission deputy chairman Montek Singh Ahluwalia later in the day. 44
  45. 45. Sources said Reinemund was likely to discuss issues of futureinvestments and the high taxation policy of the government towards the softdrinks industry and the overall fiscal environment with Chidambaram and othersenior government officials. Coca-Cola and PepsiCo have been urging thegovernment for lowering taxes, specially the special excise duty of eight per centlevied on carbonated soft drinks. This is Reinemunds first visit to India and signifies the increasingimportance of Indian operations for PepsiCo. India is now among the top eightbusinesses of PepsiCo worldwide in terms of beverage and snack sales andsecond only to China within Asia. 45
  46. 46. ADVERTISING AND PUBLICITY PepsiCo is one of the biggest end spenders in India. It is also one of thebiggest global end spenders. It has a long list of endorsers from pop starRicky Martin to film star Sharukh Khan, Karina Kapoor, Pritey Jienta, Saif AliKhan, Fardin Khan and Amitabh Bachchan. Hindustan ThompsonAssociates, the big guest advertising agency of India has the account ofPepsiCo, is known for its broad cast advertising but it also spends a lot innon broad cast advertising i.e. hoarding, banners, poster, stickers,specialties, hanger, dealer board, glow signboard, wall paintings and newspaper, the expenses of these type of advertising are made at territory or unitlevel. Allahabad territory has assigned two local advertising agencies R. D.Associates and Krishna for its territorial advertising. 46
  47. 47. Pepsis Products 47
  48. 48. 48
  49. 49. COOLING FACILITIES AT OUTLET The company has distributed 3,000 cooling approach at the outlet. Thecompany has purchased these coolers from six different companies out ofwhich few also provide maintained services. The companies are Alywn, Carrier,Kelvinator, Konark & Helchama. In India 80% soft drink is consumed at the outlets &the rest 20% isconsumed at homes, this requires the soft drink manufacturer to provideadequate cooling facilities at the outlet’s to make the soft drinks, ready to serveto the consumer. Pepsi Company wants to serve its customers with finishedproducts. The company supplies final product to the retailers & it is retail outletwhere the product is transformed into finished product. While serving the chilledsoft drinks to customer, so the chilled Pepsi available at the retail outlets is thefinished product. The company has also installed deep freezers models of 100lt, 250lt&1000lt. This cooling equipment is the property of the company, which areinstalled at outlets to serve the customer. They are in stalled at those outlets,which have a deposit of 12 crates of empties upon each 10 liter capacity of theorder & a potential of selling four carats annually on each Liter capacity of thecooler. The retailers are required to keep only PepsiCo product in these coolers. The capacity of coolers varies from 65 liters to 330 liters. Most of themodels have a transparent door, which makes the product visible. Thesemodels are called VISI coolers. 49
  50. 50. 50
  51. 51. MARKETING SCHEMES For increasing the market share and beating the competitors companyprovides different schemes on different time. The schemes are of two types onefor Consumers and other for retailers. During my training period two types ofconsumer schemes and two types of retailer schemes were going on.1. Free Flavors, To Retailers: Company offers few bottle flavors free to retailers on purchase of onecarat of flavor on some specific days. The free flavors scheme varies from onebottle to many bottles.2. Display Rack Scheme: This scheme is only for retailers. In this scheme company provides aPepsi rack to retailer. The rack is filled with different bottles of Pepsi. Theretailers are instructed that if they will maintain their racks in the same conditionas it was when it was purchased. After completion of one-month different giftpacks are distributed to the retailers.3. Hai Koi Jawab: This scheme was launched on 300ml bottle of Pepsi. This is U.T.C.scheme meaning Under the Crown. In this scheme some number are givenunder the bottle of Pepsi and company announces some lucky number. If thisnumber is matched with the number under the crown number then the owner ofthat bottle wins different cash prizes.4. Miranda U.T.C: This scheme was launched on 300ml bottle of Miranda. This is U.T.C.Scheme meaning under the crown. In this scheme some dollar amount is givenunder the bottle and the consumer may collect these dollars and add it.Company provided different gift packs on different crown number.Their schemes are offered by the company to maintain the competition at it isoffered on those days when Coca-Cola offers any similar scheme. 51
  52. 52. 4 P’S 4 P’s is the main features that directly affect the organization without 4P’s organization is not able to produce the product. 4 P’s represent the mainfeatures of product. Many possibilities can be collected into four groups ofVariables know as “Four Ps” i.e. product, price, place, promotion.Product: - Product means the good and service combination of the companyoffered to the target market. Company changes the sizes, variety, flavor brandname of the product after one or two year.Price: - Price is the amount of money which customers have to pay to obtain theproduct calculates suggested retails prices that its dealers might charge forsources. But dealers rarely charge the full sticker price.Place: - They are mostly available in al place but easily available in the UrbanMarket but not frequently found in Rural Market.Promotion: - Promotion means activities that communicate the merit of the productand persuade target customers to buy it. The measurement factor to promotethe Pepsi product is to increase good transportation in rural market. If the Pepsiis available to capture the rural market then it is certain that it will occupy firstposition of soft drinks industry. 52
  53. 53. Product Price Product Variety  List Price Quality – Sizes  Discounts Features – Services  Allowances Brand Name –  Payment Period Warranties  Creditors Packaging- Returns Target Customers Intended Positional Place Promotion Advertising  Channels Personal Setting  Coverage Sales Promotion  Assortments Public Relations  Locations Logistic  Inventory  Transportation 53
  54. 54. The Coca-Cola CompanyOne Coca-Cola PlazaAtlanta, GA 30313Phone: 404-676-2121Fax: 404-515-5997Web Site: Dow Jones Composite Dow IndustrialsIndex Membership: S&P 100 S&P 500 S&P 1500 Super CompSector: Consumer GoodsIndustry: Beverages - Soft DrinksEmployees (last reported count): 92,400 OFFICERS Pay ExercisedMr. Muhtar Kent , $ 5.60M58 Chief Exec. Officer, Pres, Director and Member of $0Exec. CommitteeMr. Gary P. Fayard , $ 1.83M $056 Chief Financial Officers and Exec. VPMr. Alexander B. Cummings Jr.,52 Chief Admin. Officer, Exec. VP, Pres of Africa $ 1.59M $0Group and Chief Operating Officer of Africa GroupMr. José Octavio Reyes , 56 Pres of Latin America and Chief Operating Officer $ 1.86M $0of Latin AmericaMr. Irial Finan , 51 Exec. VP and Pres of Bottling Investments & $ 2.13M $0Supply ChainDollar amounts are as of 31-Dec-08 and compensation values are for the last fiscalyear ending on that date. "Pay" is salary, bonuses, etc. "Exercised" is the value ofoptions exercised during the fiscal year. 54
  55. 55. REUTERS ABRIDGED BUSINESS SUMMARY The Coca-Cola Company manufactures, distributes, and marketsnonalcoholic beverage concentrates and syrups worldwide. It principally offerssparkling and still beverages. The company’s sparkling beverages includenonalcoholic ready-to-drink beverages with carbonation, such as energy drinks,and carbonated waters and flavored waters. Its still beverages consist ofnonalcoholic beverages without carbonation, including non-carbonated waters,flavored waters and enhanced waters, juices and juice drinks, teas, coffees, andsports drinks. The Coca-Cola Company also offers fountain syrups, syrups, andconcentrates, such as flavoring ingredients and sweeteners. The companymarkets its nonalcoholic beverages under the Coca-Cola, Diet Coke, Fanta, andSprite brand names. The Coca-Cola Company also owns mineral water brandsKildevaeld and Kurvand in Denmark and soft drink brand Hyvaa Paivaa inFinland. It sells its finished beverage products primarily to distributors, andbeverage concentrates and syrups to bottling and canning operators,distributors, fountain wholesalers, and fountain retailers. The company wasfounded in 1886 and is headquartered in Atlanta, Georgia. 55
  56. 56. COKE IN INDIA Coca-Cola was the leading soft drink brand in India until 1977 when itleft rather than reveals its formula to the government and reduces its equitystake as required under the Foreign Exchange Regulation Act (FERA) whichgoverned the operations of foreign companies in India. After a 16-yearabsence, Coca-Cola returned to India in 1993, cementing its presence with adeal that gave Coca-Cola ownership of the nations top soft-drink brands andbottling network. Coke’s acquisition of local popular Indian brands includingThums Up (the most trusted brand in India2 1), Limca, Maaza, Citra and GoldSpot provided not only physical manufacturing, bottling, and distribution assetsbut also strong consumer preference. This combination of local and globalbrands enabled Coca-Cola to exploit the benefits of global branding and globaltrends in tastes while also tapping into traditional domestic markets. LeadingIndian brands joined the Companys international family of brands, includingCoca-Cola, diet Coke, Sprite and Fanta, plus the Schweppes product range. In2000, the company launched the Kinley water brand and in 2001, Shockenergy drink and the powdered concentrate Sunfill hit the market. From 1993 to 2003, Coca-Cola invested more than US$1 billion in India,making it one of the country’s top international investors.22 by 2003, Coca-Cola India had won the prestigious Woodruf Cup from among 22 divisions ofthe Company based on three broad parameters of volume, profitability, andquality. Coca-Cola India achieved 39% volume growth in 2002 while theindustry grew 23% nationally and the Company reached break-evenprofitability in the region for the first time.2 3 Encouraged by its 2002performance, Coca-Cola India announced plans to double its capacity at aninvestment of $125 million (Rs. 750 crore) between September 2002 andMarch 2003. 56
  57. 57. Coca-Cola India produced its beverages with 7,000 local employees atits twenty-seven wholly-owned bottling operations supplemented by seventeenfranchisee-owned bottling operations and a network of twenty-nine contract-packers to manufacture a range of products for the company. The completemanufacturing process had a documented quality control and assuranceprogram including over 400 tests performed throughout the process. The complexity of the consumer soft drink market demanded adistribution process to support 700,000 retail outlets serviced by a fleet thatincludes 10-ton trucks, open-bay three wheelers, and trademarked tricyclesand pushcarts that were used to navigate the narrow alleyways of the cities.25In addition to its own employees, Coke indirectly created employment foranother 125,000 Indians through its procurement, supply, and distributionnetworks. Sanjiv Gupta, President and CEO of Coca-Cola India, joined Coke in1997 as Vice President, Marketing and was instrumental to the company’ssuccess in developing a brand relevant to the Indian consumer and in tappingIndia’s vast rural market potential. Following his marketing responsibilities,Gupta served as Head of Operations for Company-owned bottling operationsand then as Deputy President. Seen as the driving force behind recentsuccessful forays into packaged drinking water, powdered drinks, and ready-to-serve tea and coffee, Gupta and his marketing prowess were critical to thecontinued growth of the Company. HISTORY OF COKE 57
  58. 58. The Early Days Coca-Cola was created in 1886 by John Pemberton, a pharmacist inAtlanta, Georgia, who sold the syrup mixed with fountain water as a potion formental and physical disorders. The formula changed hands three more timesbefore Asa D. Candler added carbonation and by 2003, Coca-Cola was theworld’s largest manufacturer, marketer, and distributor of nonalcoholicbeverage concentrates and syrups, with more than 400 widely recognizedbeverage brands in its portfolio. With the bubbles making the difference, Coca-Cola was registered as a trademark in 1887 and by 1895, was being sold inevery state and territory in the United States. In 1899, it franchised its bottlingoperations in the U.S., growing quickly to reach 370 franchisees by 1910.10Headquartered in Atlanta with divisions and local operations in over 200countries worldwide, Coca-Cola generated more than 70% of its incomeoutside the United States by2003.International expansion Coke’s first international bottling plants opened in 1906 in Canada,Cuba, and Panama.11 By the end of the 1920’s Coca-Cola was bottled intwenty-seven countries throughout the world and available in fifty-one more. Inspite of this reach, volume was low, quality inconsistent, and effectiveadvertising a challenge with language, culture, and government regulation allserving as barriers. Former CEO Robert Woodruff’s insistence that Coca-Colawouldn’t buffer the stigma of being an intrusive American product,58 andinstead would use local bottles, caps, machinery, trucks, and personnelcontributed to Coke’s challenges as well with a lack of standard processesand training degrading quality. 58
  59. 59. Coca-Cola continued working for over 80 years on Woodruff’s goal: tomake Coke available wherever and whenever consumers wanted it, an arm’sreach of desire. The Second World War proved to be the stimulus Coca-Colaneeded to build effective capabilities around the world and achieve dominantglobal market share. Woodruff’s patriotic commitment that every man inuniform gets a bottle of Coca-Cola for five cents, wherever he is and atwhatever cost to our company was more than just great public relations. As aresult of Coke’s status as a military supplier, Coca-Cola was exempt fromsugar rationing and also received government subsidies to build bottling plantsaround the world to serve.Turn of the Century Growth Imperative The 1990’s brought a slowdown in sales growth for the Carbonated SoftDrink (CSD) industry in the United States, achieving only 0.2% growth by 2000(just under 10 billion cases) in contrast to the 5-7% annual growth experiencedduring the 1980’s. While per capita consumption throughout the world was afraction of the United States’, major beverage companies clearly had to lookelsewhere for the growth their shareholders demanded. The loomingopportunity for twenty-first century was in the world’s developing markets withtheir rapidly growing middle class populations.The World’s Most Powerful Brand Inter brand’s Global Brand Scorecard for 2003 ranked Coca-Cola the #1Brand in the World and estimated its brand value at $70.45 billion. Theranking’s methodology determined a brand’s valuation on the basis of howmuch it was likely to earn in the future, distilling the percentage of revenues 59
  60. 60. that could be credited to the brand, and assessing the brand’s strength todetermine the risk of future earnings forecasts. Considerations includedmarket leadership, stability, and global reach, incorporating its ability to crossboth geographical and cultural borders. From the beginning, Coke understood the importance of branding andthe creation of a distinct personality.1 8 Its catchy, well-liked slogans1 9 (it’sthe real thing60 (1942, 1969), things go better with Coke60 (1963), coke is its(1982), can’t beat the Feeling (1987), and a 1992 return to can’t beat the realthing60) 20 linked that personality to the core values of each generation andestablished Coke as the authentic, relevant, and trusted refreshment of choiceacross the decades and around the globe. 60
  61. 61. Marketing Cola in India The post-liberalization period in India saw the comeback of cola butPepsi had already beaten Coca-Cola to the punch, creatively entering themarket in the 1980’s in advance of liberalization by way of a joint venture. Asearly as 1985, Pepsi tried to gain entry into India and finally succeeded with thePepsi Foods Limited Project in 1988, as a JV of PepsiCo, Punjab government-owned Punjab Agro Industrial Corporation (PAIC), and Voltas India Limited.Pepsi was marketed and sold as Lehar Pepsi until 1991 when the use offoreign brands was allowed under the new economic policy and Pepsiultimately bought out its partners, becoming a fully-owned subsidiary andending the JV relationship in 1994. While the joint venture was only marginally successful in its own right, itallowed Pepsi to gain precious early experience with the Indian market andalso served as an introduction of the Pepsi brand to the Indian consumer suchthat it was well-poised to reap the benefits when liberalization came. ThoughCoke benefited from Pepsi creating demand and developing the market,Pepsi’s head-start gave Coke a disadvantage in the mind of the consumer.Pepsi’s appeal focused on youth and when Coke entered India in 1993 andapproached the market selling an American way of life, it failed to resonate asexpected. 61
  62. 62. 2001 Marketing Strategy Coca-Cola CEO Douglas Daft set the direction for the next generation ofsuccess for his global brand with a “Think local, act local” mantra. Recognizingthat a single global strategy or single global campaign wouldn’t work, locallyrelevant executions became an increasingly important element of supportingCoke’s global brand strategy. In 2001, after almost a decade of lagging rival Pepsi in the region, CokeIndia re-examined its approach in an attempt to gain leadership in the Indianmarket and capitalize on significant growth potential, particularly in ruralmarkets. The foundation of the new strategy grounded brand positioning andmarketing communications in consumer insights, acknowledging that urbanversus rural India were two distinct markets on a variety of importantdimensions. The soft drink category’s role in people’s lives, the degree ofdifferentiation between consumer segments and their reasons for entering thecategory, and the degree to which brands in the category projected differentperceptions to consumers were among the many important differencesbetween how urban and rural consumers approached the market forrefreshment. In rural markets, where both the soft drink category and individualbrands were undeveloped, the task was to broaden the brand positioning whilein urban markets, with higher category and brand development, the task was tonarrow the brand positioning, focusing on differentiation through offeringunique and compelling value. This lens, informed by consumer insights, gaveCoke direction on the tradeoff between focus and breadth a brand needed in agiven market and made clear that to succeed in either segment, uniquemarketing strategies were required in urban versus rural India. 62
  63. 63. Rural Success Comprising 74% of the countrys population, 41% of its middle class,and 58% of its disposable income, the rural market was an attractive targetand it delivered results. Coke experienced 37% growth in 2003 in this segmentversus the 24% growth seen in urban are as. Driven by the launch of the new Rs. 5 product, per capita consumptiondoubled between 2001-2003. This market accounted for 80% of India’s newCoke drinkers, 30% of 2002 volume, and was expected to account for 50% ofthe company’s sales in 2003.Brand Localization Strategy: The Two IndiesIndia A: “Life ho to aisi” “India A,” the designation Coca-Cola gave to the market segmentincluding metropolitan areas and large towns, represented 4% of the country’spopulation.3 3 This segment sought social bonding as a need and respondedto inspirational messages, celebrating the benefits of their increasing socialand economic freedoms. “Life ho to aisi,” (life as it should be) was thesuccessful and relevant tagline found in Coca-Cola’s advertising to thisaudience.India B: “Thanda Matlab Coca-Cola” Coca-Cola India believed that the first brand to offer communicationtargeted to the smaller towns would own the rural market and went after thatobjective with a comprehensive strategy. “India B” included small towns andrural areas, comprising the other 96% of the nation’s population. Thissegment’s primary need was out-of-home thirst-quenching and the soft drinkcategory was undifferentiated in the minds of rural consumers. Additionally, 63
  64. 64. with an average Coke costing Rs. 10 and an average day’s wages around Rs.100, Coke was perceived as a luxury that few could afford. In an effort to make the price point of Coke within reach of this high-potential market, Coca-Cola launched the Accessibility Campaign, introducinga new 200ml bottle, smaller than the traditional 300ml bottle found in urbanmarkets, and concurrently cutting the price in half, to Rs. 5. This pricingstrategy closed the gap between Coke and basic refreshments like lemonadeand tea, making soft drinks truly accessible for the first time. At the same time,Coke invested in distribution infrastructure to effectively serve a disbursedpopulation and doubled the number of retail outlets in rural areas from 80,000in 2001 to 160,000 in 2003, increasing market penetration from 13 to 25%. Coke’s advertising and promotion strategy pulled the marketing plantogether using local language and idiomatic expressions. “Thanda,” meaningcool/cold is also generic for cold beverages and gave “Thanda Matlab Coca-Cola” delicious multiple meanings. Literally translated to “Coke meansrefreshment,” the phrase directly addressed both the primary need of thissegment for cold refreshment while at the same time positioning Coke as a“Thanda” or generic cold beverage just like tea, lassi, or lemonade. As a resultof the Thanda campaign, Coca-Cola won Advertiser of the Year and Campaignof the Year in 2003. 64
  65. 65. CORPORATE SOCIAL RESPONSIBILITY As one of the largest and most global companies in the world, Coca-Cola took seriously its ability and responsibility to positively affect thecommunities in which it operated. The company’s mission statement, calledthe Coca-Cola Promise, stated: “The Coca-Cola Company exists to benefitand refresh everyone who is touched by our business.” The Company hasmade efforts towards good citizenship in the areas of community, by improvingthe quality of life in the communities in which they operate, and theenvironment, by addressing water, climate change and waste managementinitiatives. Their activities also included The Coca-Cola Africa Foundationcreated to combat the spread of HIV/AIDS through partnership withgovernments, UNAIDS, and other NGOs, and The Coca-Cola Foundation,focused on higher education as a vehicle to build strong communities andenhance individual opportunity.Coca-Cola’s footprint in India was significant as well. The Company employed7000 citizens and believed that for every direct job, 30-40 more we re createdin the supply chain. Like its parent, Coke India’s Corporate Social Responsibility (CSR)initiatives were both community and environment-focused. Priorities includededucation, where primary education projects had been set up to benefitchildren in slums and villages, water conservation, where the Companysupported community-based rainwater harvesting projects to restore waterlevels and promote conservation education, and health, where Coke Indiapartnered with NGOs and governments to provide medical access to poorpeople through regular health camps. In addition to outreach efforts, thecompany committed itself to environmental responsibility through its ownbusiness operations in India including. 65
  66. 66.  Environmental due diligence before acquiring land or starting projects. Environmental impact assessment before commencing operations. Ground water and environmental surveys before selecting sites. Compliance with all regulatory environmental requirements. Ban on purchasing CFC-containing refrigeration equipment. Waste water treatment facilities with trained personnel at all company- owned bottling operations. Energy conservation programs. 50% water savings in last seven years of operations 66
  68. 68. RESEARCH METHODOLOGYScope of the study:The research pertains to the study of consumer choice for soft drinks at Udaipurmarket. This study is attempt to analyze the present top brands preferred bycustomer for soft drink in udaipur market, examine the product factors thatinfluence the purchasing decisions of buyers and to know the relation betweengender & preference for soft drinks & flavors.Objectives of the studyAs every research has some objective/s to achieve or problem/s to solve.Because every research is conducted in order to achieve some objectives.Objectives of this research stud y are- 1. To study the brand preference for different kind of soft drinks. 2. To determine the factors that influences the consumer choice of a particular soft drink. 3. To study the consumption pattern & behavioral aspects of consumes such as frequency of consumption, quantity of consumption, place of consumption etc. 4. To study the sales promotion tool/techniques sources of media that attracts consumers most. 68
  69. 69. METHODOLOGYData collectionThe type of data collected for the research was primary as well as secondary.Primary data was collected through: • Direct contact with the customers. • Questionnaires filled by the customers.Secondary data was collected through: • Various journals • Internet survey reports 69
  70. 70. Field work and SampleWhile developing and utilizing a sample for the research purpose, the followingsteps were used: • Defining the universe • Developing the sample frame • Selecting a sampling frame • Determining the sample size • Selecting the research instrumentUniverseThe universe or population is the specific group of people is the specific groupof people from conditions, activities, etc. which form the pivotal point of theproject.For developing and using sample, it becomes the primary duty of researcher todefine the population from which shehe intends to draw the sample.The universe of my project is about 130 consumers of Udaipur city, whichformed the pivotal point of my project.Sampling frameA sampling frame may be defined as the listing of the general components ofthe individual unit that comprise the defined population.In case of my project, sampling frame is various consumers frame is variousconsumers including lower middle class, middle class and rich class. 70
  71. 71. Sampling procedureAfter defining the sampling frame, other important point to be discussed iswhich sampling procedure to be adopted.A simple random sampling technique will be used to understand customer’soutlook towards the soft drinks.Sample size130 consumers of Udaipur city an attempt will be made to make the samplerepresentative of the whole population under study.Research instrument:Questionnaires were used to find out “Factors influencing consumer choice ofsoft drinks” in Udaipur city with the help of the questionnaire, filled by 130consumers, the result was analyzed.The process was followed to prepare a questionnaire: 1. Specify the information needed. 2. Determined the types of questions to be asked. 3. Deciding the number and sequence of questionnaire. 4. Preparing preliminary draft of questionnaire. 5. Revised and protested the questionnaire. 71
  72. 72. LimitationsAlthough the research was conducted in a way to ensure accurate results butcertain errors might have occurred due to some unavoidable reasons. Some ofthe limitations of the project are:-Data collection 1. Non-response by some of the respondents. 2. Since the population is not homogeneous, some biasness might have creped in. 3. The sample of convenience, thus it is not the true representative of the complete.MEASUREMENT ERRORThere was certain degree of misinterpretation by the respondents about thepoints raised in the interview. 72
  74. 74. Data Analysis and Interpretation 1. Gender wise profile: No. of Respondents In% Males 70 54% Females 60 46% Total 130 100% Graph 1.1 Gender wise Profile Female Male 46% Male 54% FemaleInterpretation:As the above graph shows that there were equal male and female respondents,males were little higher than females by only 4%. 74
  75. 75. 2. Age wise Profile: More 10-20 21-30 31-40 In % In % In % than 40 In % Total years years years years Male 12 17% 28 40% 21 30% 9 13% 70Female 14 23% 20 33% 16 27% 10 17% 60 Total 26 20% 48 37% 37 28% 19 15% 130 Graph 2.1 Age Wise Profile of Males Respondents 10-20 years 21-30 years 31-40 years More then 40 years 13% 17% 30% 40%Interpretation: As the above graph clearly depicts that most of males respondents [40%]were youth as fall into the category of 21-30 years. 75
  76. 76. Graph 2.2 Age Wise Profile of Females Respondents 10-20 years 21-30 years 31-40 years More then 40 years 17% 23% 27% 33%Interpretation: As the above graph clearly depicts that most of females respondents[33%] were also youth as they fall into the category of 21-30 years. 3. Occupation wise Profile: 76
  77. 77. Other [Students Service In % Business In % Professionals In % housewives In % etc.] Male 28 40% 14 20% 9 13.% 19 27%Female 10 17% 0 0% 8 13.% 42 70% Total 38 28.% 14 10% 17 13.% 61 47% Graph 3.1 Occupation Wise Profile of Males Service Business Professionals Students 27% 40% 13% 20% Interpretation: As the above graph clearly shows that there were most of males respondents [40%] were service category Graph 3.2 77
  78. 78. Occupation Wise Profile of Fem ales Service Students Professionals Housew ife 17% 43% 27% 13%Interpretation: As the above graph clearly shows that there were most of femalesrespondents [43%] were housewives category4. Income group wise profile: 78
  79. 79. Less than In % 10,000- In % 15,000- In % More than In % Total Rs. 10,000 15,000 20,000 20,000 Male 37 53% 9 13% 9 13% 15 21% 70Female 42 70% 4 7% 8 13% 6 10% 60 Total 79 61% 13 10% 17 13% 21 16% 130 Graph 4.1 Incom e Wise Profile of Males Less then Rs. 10,000 10,000-15,000 15,000-20,000 More then Rs. 20,000 21% 13% 53% 13%Interpretation: As the above graph clearly shows that there were most of malesrespondents [53%] were income group of Rs. Less than Rs. 10,000. 79
  80. 80. Graph 4.2 Incom e Wise Profile of Fem ales Less then Rs. 10,000 10,000-15,000 15,000-20,000 More then Rs. 20,000 10% 13% 7% 70%Interpretation: As the above graph clearly shows that there were most of femalesrespondents [70%] were income group of Rs. Less than Rs. 10,000.5. Ranking of different flavors of soft drinks according tochoice of consumers: 80
  81. 81. Graph 5.1 Ranking of Soft Drinks Flavors of Respondents Males Females Lemon 3 4 Mango 2 1 Orange 1 3 Cola 4 2 0 1 2 3 4Interpretation: The above graph shows that Mango Flavor is preferred most by the malecustomers than next is Cola & Lemon is least preferred by them. The above graph shows that Orange Flavor is preferred most by thefemale customers than next is Mango & Cola is least preferred by them.6. Brand recall of different soft drink brands: Brand Cola Pepsi Thums up Fanta Slice Mirinda Limca Fruity Maza Recall 81