Coke and Pepsi in India

Case 1-3: Coke and Pepsi Learn to Compete in India

BUS664 – International Marketing

Baker College Online

Catie Butler

Content

1. The political environment in India has proven to be critical to company performance for both PepsiCo and Coca- Cola India. What specific aspects of the political environment have played key roles? Could these effects have been anticipated prior to market entry? If not, could developments in the political arena have been handled better by each company?

The political environment in India has proven to be critical to company performance for both PepsiCo and Coco-Cola India. In Coca-Cola's first entry into this market, they left after being given the ultimatum to turn over their trade secret recipe. This move by India's government displays the corruption that is present. In 1991 a new government took office which made it easier for foreign companies to do business in India.

Not only were business practices better, the economy was made better with the practices of the new government in place. With India coming out of economic hardships, they were an emerging market that many corporations were eager to do business with. PepsiCo took advantage of early timing and entered the market as "Pepsi Foods Ltd." as a joint venture company with two local partners; Voltas and Punjab Agro.

During the crisis with the contaminated water, Pepsi and Coca-Cola were both under fire with the consumers and government. Politicians made it exceptionally difficult for both companies to redeem themselves with the facts they had. Coca-Cola seemed to have a more difficult come-back than Pepsi.

Some of these effects may have been anticipated, especially foreseeing the corruption within Indian government. Taking that into account more proactively might have helped Coca-Cola avoid hardships in the past. As far as the contamination issues goes, that might not have been so easy to anticipate. Both companies held their own when trying to prove their products were within safe limits compared to other food products.