COCA-COLA INDIA

Prepared By
PGP 17072
Summer Trainee 2002
 BACKGROUND

Coca-Cola India is a subsidiary of The Coca-Cola Company World wide. The Holding
company commands the biggest brand in the world, and the effect of the larger-than life
image of the Coke brand rubs off onto the subsidiary. The vision of Coca Cola, is to ‘be
the leader in all kinds of non-alcoholic beverages in the world. Any discussion of Coca
Cola India (CCI) will have to include the glory of Coke worldwide. Hence this analysis
starts with a history of Coca-Cola worldwide, and then speaks of Coke’s presence in
India.
HISTORY OF COCA-COLA

Coca Cola syrup was invented in the year 1886 by John Pimberton, in Atlanta , as a non-
alcoholic variant to his ‘French Wine Of Coca’. In fact, it is said that the original formula
included cocaine and was to be called ‘Yum Yum’! The name Coca–Cola as well as the
famous font of writing it was given by Pimberton’s accountant Frank Robinson.
Originally, the syrup was sold as a cure for nervous disorders and indigestion. Once, by
accident it was mixed with soda for an ailing customer who wanted fast relief. He
commented that is ‘tasted great’ and Coca Cola as a carbonated drink was born.

The History of Coca-Cola is dotted with leaders who led the company through one epoch
to another. After Pimberton, the next big name in the History is that of Robert Woodruff.
Afetr his immense success as Vice President of the Wgite Motor Company, Robert was
offered the top seat in Coca-Cola. Some of Woodruff's early accomplishments were the
pioneering use of service stations as major new retail outlets. He also pioneered the use of
the cooler. He forced bottlers to comply with company standards that insured a uniform
drink. Bottlers that did not conform to the standards lost Coca-Cola sponsored advertising
in their area, or were simply bought out by Coca-Cola. His was the era of ‘The pause that
refreshes’ – the punch line for Coke at that time. During WWII , Woodruff helped Coke
make huge inroads into markets around the world. Robert Woodruff retired from the post
of CEO in 1955.

The next big name in the company’s archives is that of Roberto Goizueta. Goizueta had
started as a chemist with Coca-Cola, and in fact was one of the few people who actually
new the famous Coca-Cola secret formula. He introduced ‘Diet Coke’ in 1980, and it was
a huge success. However, he is better remembered for the huge mistake of bringing out
the sweeter version of ‘Coke’ called “New Coke’ which bombed and caused the company
billions of dollars in losses. The present Coke CEO is Douglas Daft.

COCA COLA INDIA

In 1993, Coca Cola came back to India, after having been ousted by a ‘swadeshi’
government in 1977. The company has been posting huge losses until the current
financial year, when they broke even on their bottling business. However, the break even
occurred due to a write off of losses worth 600 million Rupees. Thus it is merely a
financial manipulation. CCI is struggling a lot in India, due to Pepsi having ‘spoilt the
market for them’. However, the trend has been upwards only, with gains in volumes,
along with recent gains in preference.

ORGANIZATIONAL STRUCTURE OF CCI

The structure of Coca-Cola India is as detailed below:
Division President (Alex Von Behr)

Deputy Division President (Sanjeev Gupta)

VP Finance/ HR/ Legal/ VP Franchise Operations

External Affairs/ marketing

AGMs
AGMs
Plant Mgr RGMs
Plant Mgr Reg HRM
Fin. Mgr Franchise Mgr.
Fin. Mgr Reg Fin.
HR Mgr. RTQMs
HR Mgr. Reg Tech.
Quality Mgr. CSS and Trg.
Quality Mgr. CSS and Trg.
IS Mgr. IS Mgr.
IS Mgr. IS Mgr.
AMMs
Reg. Mktg

The hierarchy of the corporate marketing office is as follows:

COCA COLA BRANDS IN INDIA

Bm = Brand Manager
Currently, the company owns the following main brands in India. The beauty of the
positioning strategies lies in differentiating between beverages that are essentially the
same in nature in order to avoid cannibalization. The brands, with their respective
positioning statements are detailed below:

 Coca-Cola or Coke: For people around the world with a youthful spirit who
thirst to get the best out of life, Coke is the beverage experience that quenches
their thirst for refreshment and human connection so that people can enjoy all
that each moment has to give because only ice-cold Coke provides the delicious
taste and deep down refreshment for the body, mind and spirit that people need to
be and feel their best. The mean target age is 18 years.
 Thums Up: For the 20 – 29 year old SEC ABC, young adult male, Thums Up is
the only drink that symbolizes his maturity, masculinity and self-confidence
because Thums Up has a unique ‘strong taste’.
 Limca: To the 20 – 29 year old SEC ABC, young adult who has achieved
independence and is full of ambition, Limca is the only drink that quenches his
physical thirst best because its unique ‘lime and lemoni’ flavor combined with
its light-hearted and positive attitude to life.
 Fanta: To teens and young adults who lead routine lives, yet appreciate little
joyful moments in life which give them a break from their day-to-day routine,
Fanta is the only fruit flavoured carbonated soft drink that helps them dissolve
their inhibitions and indulge in those moments because its bright radiant colors
bring out feelings of joy and its tempting taste makes them give in to the moment.
 Sprite: To teens who are in the process of establishing their own identity, Sprite
is the teen drink that encourages then to trust their own instincts because its
self-confident honest attitude balanced with its crisp clear taste is instinctively
right.
 Maaza: (Post a recent repositioning) To mothers of 7-9 year old kids, who know
that it is important to be friends with their kids today, because these moments of
friendship and sharing bring pure joy to them, and also enable them to know what
is going on in their child’s life, Maaza is the only fruit drink that that allows the
mother to enter into these moments with her child because while the child loves
its taste, the mother knows she has given him a drink that has the goodness of
real fruit fortified with Calcium.
 Kinley water: To 20+ year old SEC A/B/C + Indians, who are seeking a
healthier quality of life, Kinley is the superior bottled water that they can trust.
 Sunfill: For housewives aged 27-32 years, belonging to the lower middle
income and class (SEC BCD, Rural, MHI > 5000), Sunfill is the only beverage
that is better than any other soft drink concentrate/ squash because it enables and
allows her to be seen as the sensible provider of everyday joyous moments to her
family since it is packed with calcium and vitamins and is convenient and
affordable.
 Shock: For the young adult 19-39 year old SEC A metro residents who need to
live life to the fullest, Shock is the only beverage that energizes them and helps
them unleash their wicked side because shock is a super power packed energy
 drink containing Ginseng and Guarana. Shock relies heavily on very attractive
packaging for its appeal. It is a very niche product priced at 40 Rs for 250 ml. It is
not doing too well, except in certain pockets.

The relative positions of the various brands are as detailed below:

Brand Market Share Volume (2001) Favorite Unaided ad

(Dec 2000) (%) (Million ucs+) Brand (%) awareness (%)
Coca Cola 18 41.2 17.6 62.9
Thums Up 19.2 57.4 22.4 44.9
Limca 10.3 23.0 10.2 16.3
Fanta 4.7 15.8 4.8 10.3
Sprite 2.0 7.7 1.8 8.7
Diet Coke .1 NA 0.1 NA
TOTAL 57.1 145.1 56.9 -

Kinley water* 18.6 14.6

Maaza* 6.2 16

*In respective Beverage Category

+
1 uc = 1 unit case = 5688 ml.
Source: RSA database, and internal DSS

CONTRIBUTION OF EACH BRAND

The contribution of each brand to the earnings of Coca-Cola India is detailed below:

Brand Contribution to CCI (2001 figures)

Coke 32%
Thums Up 33%
Limca 18%
Sprite 5%
Fanta 12%

Source: Internal DSS

 COMPETITIVE POSITION

In India, the competition in Carbonated Soft Drinks, after Coca-Cola’s buy out of Parle
brands, has narrowed down to Coca-Cola and Pepsi as the two main players in the
carbonated soft drink segment. In the bottled water category, other big players, apart from
Coca-Cola’s Kinley (with 30% market share) are:
 Bisleri (The market leader)
 Parle Bailley
In the fruit drink category, Maaza is a clear leader, with Slice as a distant second.
As of now, Pepsi is the single largest selling carbonated soft drink (CSD) in India. Thums
Up ranks second with Coke taking the third place. However, Thums Up and Coke are
together stronger than Pepsi. The Market Share figures are as detailed below:

Brand Market Share (23 cities - 2001 fig)

Pepsi 28%
Thums Up 19.2%
Coke 18%

REASONS FOR SUCCESS OF COCA-COLA

I could identify the following reasons why Coke has reached such heights worldwide.
These reasons also apply to some extent to improvements in CCI’s performance:

 An overpowering history and great consumer sentiment in favor of the drink. In

many countries (such as America) Coke is in the same league as burgers and
hotdogs. It has been able to become an essential part of millions of lives all over
the world. The New Coke debacle is evidence enough of the extreme sentiments
of consumers against any change in their favorite soft drink.
 A huge presence in many countries of the world – more than even Pepsi.
 Reliance on advertising that appeals to the end consumer’s sentiment.
 The policy of buying out the competition as far as possible. This ensures that in
most markets, Coke has at most only Pepsi to deal with.

SOME CAVEATS/ WEAKNESSES

Despite the huge brand name and the millions of dollars sunk into it as investment, CCI
suffers from certain drawbacks that hamper its growth:

 Customer needs vs consumer needs: For CSDs, the customer and the consumer
are widely different. While the customer is the distributor, the franchisee, or the
retailer to whom the company sells the product, the consumer is the end user who
drinks the beverage. Coke’s policy in India, a well as in the rest of the world has
been to create a market pull from the consumer’s side through efficient
 advertising. However, they have been ignoring distribution issues that pertain to
the customer. These include discounts to the dealers, flooding the market with
your product through dealer schemes, distribution of visi-coolers and other
benefits, as well as branding of retail outlets. Pepsi, on the other hand, focuses on
the customer also. Their dealers get far more benefits at lesser cost. At the end of
the day, the soft drink industry relies heavily on availability of their product in
chilled form at all outlets. This is something in which CCI lags behind Pepsi.
 Lack of autonomy to Coca-Cola India: Coca-Cola worldwide has been the boss
for CCI for a long time. In fact, many of the early Coke advertisements are
straight lifts from successful concepts in other parts of the world. Only recently
the subsidiary has been given greater autonomy to make its own decisions. This
‘think local act local’ strategy should have been implemented much earlier.
 What to do with local brands? Coca-Cola had a lot of confusion as to how it
should deal with the Parle brands that it bought out. For example, the initial plan
was to wipe out Thums Up since Coke does not have another Cola in their
portfolio anywhere else. They only have variants such as Diet Coke, or Cherry
Coke. However, Thums Up is too strong a brand, and this strategy backfired. Now
Thums Up is being promoted, yet it gets secondary status to Coke, although it is a
far bigger brand than Coke in India, with a definite taste preference in its favor. At
the other extreme, Gold Spot, a strong orange flavored Cola in the south was
eliminated in order to establish Fanta.
 Bottling: In most countries Coca-Cola is into concentrate preparation, which is
basically the making of the initial syrup that needs to be carbonated, sweetened
and diluted to get the final beverage. The margins in the concentrate business are
far higher than the bottling business. However, in order to establish the brand in
India, they own Company owned bottling plants (COBOs) in addition to
Franchisee owned bottling plants (FOBOs). The concentrate business has been
profitable for a long time, but the company has had trouble breaking even on the
bottling business.
 The 300 ml Skew: Coke is still heavily dependent on the 300ml RGBs
(Returnable glass bottles) for volumes. However, the future of the industry lies in
the mobiles or PET bottles and the new 200ml bottle. While Pepsi has flooded the
market with the 200ml ‘Chota Pepsi’, Coke and Thums Up have not yet been able
to ensure availability of their parallel products. For example, in coastal Andhra,
Pepsi have taken away substantial share from market leader Thums Up through
their 200ml ‘Chotta Pepsi’.

WORK CULTURE/ HR ISSUES

The company invests a lot of resources into taking care of its employees. There are
regular HR exercises to motivate the employees and obtain feedback from them. This, I
feel is the greatest positive in the work culture.
The organization has a very informal work environment. The dress code and behavior is
very informal and relaxed. In particular, the corporate marketing office where I worked
has a flat hierarchy. The requirements of the organization from their people is:

 A healthy and confident attitude

 Creativity
 Capability to take hard work conditions and frequent travel

Overall, I would call it a great place to work with for people who are creative, capable of
out-of-box thinking and are confident