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Case Study

Coca-Cola India

Version 1: August 22, 2003

Presented by: Fred Smith

Company profile

* Coca-Cola, established in 1886, is the world’s largest beverage company with operations in over 200 countries worldwide and was ranked #1 with estimated brand value of $70.45 billion on Interbrand’s 2003 Global Brand Scorecard. Coca-Cola entered Indian markets in the early 1950’s with virtually no competition and had a 45% market share of India’s cola market when it left in 1977, vice succumbing to multiple requirements under a new Foreign Exchange Regulation Act (FERA) of 1974. Upon Coca-Cola’s departure, the Parle brothers started manufacturing “Thums Up” cola with the slogan, “Happy Days are here again,” filling the Coca-Cola “void” and becoming the country’s leading cola manufacturer. They eventually gained over a 60% market share through a variety of products until Pepsi’s entry in the early 90’s and Coca-Cola’s reentry in 1993. Coca-Cola subsequently purchased Parle for $60 million (USD), gaining immediate access to an extensive bottling plant network and the ability to rapidly integrate its international brands throughout the country. Between 1993 and 2003, Coca-Cola invested over $1 billion (USD) into India. After writing down of its Indian bottling assets’ value by $415 million (USD) in 2000, Coca-Cola India finally turned the corner into profit in 2002, increasing volume growth by 39% and achieving breakeven profitability for the first time. As of mid-2003, year-to-date growth was 25-30% with a 75% five-year growth trajectory. Coca-Cola India has two focused on two separate areas of marketing: (1) metropolitan areas and large cities representing 4% of the country’s population and (2) rural areas and small towns that represent the remaining population.

Business situation

Sales have dropped 30-40% and shares of COKE and CCA...