Cola Wars In india

anant1a

anant1a

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The case explains Cola wars in India and brings out the unique challenges which multinational corporations face in developing countries.
In 2003, the Indian subsidiary of the Coca-Cola Company was awarded the Robert W. Woodruff Award for outstanding business performance. Coca-Cola's turnaround in India had come after a period of heavy investments. During the period 1993-2002, the company had invested $1 billion in India. In 2003, Coca-Cola had 17 manufacturing units, 60 distribution centers catering to 5,000 distributors and one million retail outlets, serviced via trucks and three-wheelers. Coca-Cola directly employed 10,000 people.
 
The two cola giants, who have been waging a desi marketing war since the time they stepped into the country, tried to take full advantage of this year’s Indian weather conditions. But it is difficult to say who emerged victorious.

The latest tricks from the Pepsi bag were: Grow-Up, an answer to Coke’s Thums-Up, and a second juice brand called Twister. Pepsi was extremely cautious about India because Coke had announced the fact that it is the market leader in non-carbonated beverages, a segment growing faster than both the companies’ core soft drinks market. This is apart from the cola giants’ flavoured sodas like Sprite or Mountain Dew.

Pepsi had also challenged Coke’s taste-test research, which apparently revealed Thums-Up as a favoured drink among the age group of 12 to 39 years. Pepsi was meticulously careful in this battle, as Pepsi India’s operations have already threatened to raise infringement of trademark issues with Coke in the US.

But how could Coke be left behind? It, of course, relied on the successful legwork it had done in the initial stage. But since over the years the sales have plummeted (don’t worry, along with Pepsi’s), it started innovative ways of advertising: Coke is putting up ads in curious places, from public toilets to luggage carousels at airports.

Now both the giants are gearing up for a new battle that is of one-upmanship and, obviously, better sales.

Let’s take a break from the ongoing cola news. How did the carbonated soft drink industry fall from 71.3 per cent in 1990 to 60.5 per cent last year, when factors like awareness, lifestyle and population should have ensured huge sales rise? Does that mean people have suddenly started realising that the (self-created) famous war is just hype and there is no substance after the initial burp?

Explanations vary, but the basic fact is that people are turning away from fizzy drinks to healthier bottled waters and bottled teas. Though still only a tiny slice of the soft drinks market, functional drinks have grown by 62 per cent in volume over the past five years. No wonder that both the rivals are realising the potential of this segment, and are trying to tap it as a last survival act.
Nevertheless, it is only in India that the potential of its rich legacy of healthier drinks is not tapped. We do not have the imagination or the inclination to package and market them. Instead, we allow global sweet water manufacturers to take advantage of our palate, which has for centuries savoured buttermilk, neera, nimbupani, ganne ka ras and so on.
 
Thirsty India reviles Coca-Cola

Obtaining water is difficult enough for India's rural poor with bottlers like Coca-Cola draining the aquifers dry to produce commercial beverages.

I heard that Coca Cola is depleting ground water around bottling plants in India so surrounding villages have no safe water supply? Is this true?


-- Dan Ehl, Centerville, IA





An ongoing drought has threatened groundwater supplies across India, and many villagers in rural areas are blaming Coca-Cola for aggravating the problem. Coke operates 52 water-intensive bottling plants in India. In the southern Indian village of Plachimada in Kerala state, for example, persistent droughts have dried up local wells, forcing many residents to rely on water supplies trucked in daily by the government.





Some there link the dry wells to the arrival of a Coca-Cola bottling plant in the area three years ago. Following several large protests, the local government revoked Coca-Cola’s license to operate last year, and ordered the company to shut down its $25 million plant.





Similar problems have plagued the company in the rural Indian state of Uttar Pradesh, where farming is the primary industry. Several thousand residents took part in a 10-day march in 2004 between two Coca-Cola bottling plants thought to be depleting groundwater. "Drinking Coke is like drinking farmer’s blood in India," said protest organizer Nandlal Master. "Coca-Cola is creating thirst in India, and is directly responsible for the loss of livelihood and even hunger for thousands of people across India," added Master, who represents the India Resource Center in the campaign against Coca-Cola.





Indeed, one report, in the daily newspaper Mathrubhumi, described local women having to travel five kilometers (three miles) to obtain drinkable water, during which time soft drinks would come out of the Coca-Cola plant by the truckload.





Water isn’t the only issue. The Central Pollution Control Board of India found in 2003 that sludge from the Uttar Pradesh factory was contaminated with high levels of cadmium, lead and chromium. To make matters worse, Coke was offloading cadmium-laden waste sludge as "free fertilizer" to tribal farmers who live near the plant, prompting questions as to why they would do that but not provide clean water to local residents whose underground supplies were being "stolen."





Another Indian nonprofit group, the Centre for Science and Environment (CSE), says it tested 57 carbonated beverages made by Coca-Cola and Pepsi at 25 bottling plants and found a "cocktail of between three to five different pesticides in all samples." CSE Director Sunita Narain, winner of the 2005 Stockholm Water Prize, described the group’s findings as "a grave public health scandal."





For its part, Coca-Cola says that "a small number of politically motivated groups" are going after the company "for the furtherance of their own anti-multinational agenda." It denies that its actions in India have contributed to depleting local aquifers, and calls allegations "without any scientific basis."





CONTACTS: India Resource Center, www.indiaresource.org;
 
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