Coke v/s Pepsi

Authors: Arijit Biswas & Anindya Sen

Presented By: Shekar Salvi (M-11-49) Pradeep Singh (M-11-55) Nilesh Thorat (M-11-57) Parth Vasani (M-11-60)

Introduction
Stiff Competition by MNCs

Strategy adopted by Local Players

Tie-ups or Head on

Local Players should keep track of global strategies of MNCs

Strategies at local level are part of the global strategies Difficult for any firm to allow significant differences in approach in different markets

After Coca-Cola made exit from Indian market in 1977 there was a vacuum in the soft drink industry
Parle (Thums Up) and Pure Drinks.

Pepsi first mover advantage

India seemed to be one of the rare markets were Pepsi was holding its own against Coke

The Story Of Coke The Real Thing

Coke was first prepared by pharmacist John Styth Pemberton in 1886 Initially the beverage was introduced in Atlanta, Georgia and was sold for 5 cents.

John Styth Pemberton Timeline 1886 1891 1919 1994 Sales of coke averaged 9 drinks per day. Atlanta entrepreneur Asa G Candler acquired complete ownership of the Coke business. The Coca-Cola Company was sold to a group of investors for 25 million. American consumption was more than 773m.

The Story Of Coke The Real Thing

The Story Of Coke The Real Thing

The Story Of Pepsi The Challenger

Pepsi-Cola was created in late nineties by pharmacist Caleb Bradham Frito-Lay was formed by the 1961 merger of Frito Company founded by Elmer Doolin in 1932 & the H W Lay Company Founded by Herman W Lay in 1932.

PepsiCo Inc was founded in 1965 by Donald M Kendell, President & CEO of Pepsi-Cola & Herman W Lay, Chairman & CEO of Frito-Lay through the merger of two companies.

Caleb Bradham

The Story Of Pepsi The Challenger

In 1984 PepsiCo was restructured to focus on its 3 business Soft drinks, Snack Foods & Restaurants Transportation & Sporting goods businesses were sold off. Currently Present in 150 countries Snack Food operations are in 10 international markets.

DISSIMILARITIES
COKE V/S PEPSI

Divesification
PepsiCo has increasingly diversified into restaurants and snacks, while Coca-Cola has focused on soft drinks. PepsiCo's snacks business is Frito-Lay and its restaurant business includes Pizza Hut, Taco Bell and KFC.

All of Cokes profits come from beverages while PepsiCo depends on drinks for only 41 per cent of its income.

Globalisation
Coke generates 71 per cent of its revenue in international markets; PepsiCo derives 71 per cent from the US market.

Make or Buy
PepsiCo has long had a tradition of owning a major percentage of its operating entities. It owned over 50 percent of its restaurants worldwide. In the soft drinks arena, again, it owns half its bottlers, Coke owns none. PepsiCo sold the entire restaurant division to Tricon Global Restaurants for a onetime payment of $ 4.5 billion.

Performance
PepsiCo put emphasis on increasing revenues while Coke focused on ROI and stock prices. Pepsi concentrated on celebrity advertising and blow-out marketing campaigns, Coke concentrated on investing infrastructure like bottling plants and trucks.

The Soft Drink Industry Scenario in US

Market share (percent)

Markets Coke Pepsi

US Mexico Japan Brazil East-Central Europe Germany Canada Middle East China Britain

42 61 34 51 40 56 37 23 20 32

31 21 5 10 21 5 34 38 10 12

Per capita consumption(in bottles)

Country Consumption

US Mexico Brazil Philippines Thailand India

700 506 165 130 75 3

Salient features of US soft drink market

Independent bottlers and exclusive and perpetual territories. The movement towards a captive bottling system.

Shekhars Part Put Here

The Soft Drink Industry Today

Franchise bottlers

Reduce conflicts with bottlers

Equity stake in two bottling To own Bottling unit Bottler should feel safe Bottler should have active role companies

Political pressure by bottling companies

Plans of Bottlers to launch new soft drink Coke is forcing bottlers to thrash plans

New division of Coke in India

Separate division Less bureaucracy Restructuring was needed-autonomy Promotional campaigns for other brands

Conclusion
Shake out Local players losing to global giants Bigger bottles for home consumptions Immense demand with 15 crore middle class

Low per capita consumption

Sponsorships of local and international events Cost of entry high Giants have created barriers for others by taking control over distribution FOBO is not followed by Coke due to legal and political problems Pepsico has followed same global strategy