Part 12: Thums Up Story: Coca Cola enters India

Previously, we had seen how Lehar Pepsi campaigned aggressively to portray itself as the right choice for youngsters in 1990:

While Pepsi was struggling to enter India in the late 1980s, Coca Cola was on its toes. The Atlanta based company which was booted out in 1977, was waiting for policies which could allow it to operate on its own terms and conditions in India (Unlike Pepsi which was ready to bow down to Indian Govt for an entry).

Recollect that Pure Drinks (the company which owned Campa Cola brand) which was actually a franchise for Coca Cola before 1977, was in talks with the company throughout late 1980s for a feasible partnership.

1989_fizzSince the marketshare of Campa Cola was shrinking by the day, it was in the best interest of Pure Drinks to persuade Coca Cola for a partnership in the form of joint venture or bottling franchise. However, the conditions were still not suitable for Coca Cola and the decision was indefinitely postponed.

Within a few days of assuming power in 1991, PV Narasimha Rao took the Indian economy head on by flagging off economic liberalization. Over the next few months, his trusted lieutenant & Finance Minister, Dr. Manmohan Singh unveiled a series of economic reforms which opened the floodgates for the entry of a slew of foreign companies.
pvn_singhIn Oct 1991, while the economic reforms were still in progress, Coca Cola took the bait and entered into a partnership with Britannia (the biscuit company) to launch Coca Cola in India. Despite getting an approval from the Govt of India, the venture between Coca Cola & Britannia did not work out and the project was scrapped even before its launch.

In early 1992, when Dr Manmohan Singh lifted the restriction of 40% cap for equity by foreign company, Coca Cola pounced immediately and declared its intention of returning to India.
1992_coke_resumeIn contrast to the bureaucracy of earlier Govts, the PV Narasimha Rao Govt approved Coca Cola’s plans within just a few months (whereas Pepsi had to struggle for 5 years in the previous Govts).
In June 1993, Coca Cola acquired a bottling plant near Agra and painted the town red. Billboards with taglines like “Happy to be here” had dominated the streets of Delhi & Agra by September 1993.
coke_1993Already under tremendous pressure due to competition from Pepsi, Ramesh Chauhan felt cornered when Coca Cola announced its arrival but he still tried to put on a brave face. While on one hand, there were 
rumors of Parle selling out to Coca Cola or partnering with Pepsi, on the other hand, there were speculations about Ramesh Chauhan launching a new cola brand altogether to take on both the American cola giants.
Ramesh Chauhan, the darling of the industry throughout 1980s, was now at the center of attention. Did he pull a rabbit out of his hat?
We shall find out in the next part tomorrow.

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