Coca-Cola India in 2004 - Marketing Strategy

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Case Details:

Case Code : MKTA010
Case Length : 21 Pages
Period : 1993-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : Coca Cola
Industry : Beverages
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction

In March 2003, a message from Coca-Cola's global headquarters in Atlanta, United States, created a lot of excitement in the Indian subsidiary. Coca-Cola India (CCI), had been awarded the Woodruff award¹ for outperforming the dozen-odd emerging markets of Coca-Cola worldwide in growth and profitability during 2002. The comeback was remarkable for the global cola major. In January 2000, the company had stated that its investment in India had yielded disappointing returns.

The company had invested $800 million in its Indian operations since its reentry in India. From causing a dent in the parent's bottom line to winning the prestigious Woodruff award, CCI seemed to have come a long way.² CCI was also a major sourcing point for its global operations.

Apart from product brands, the company was also a major supplier of commodities and materials like sugar, coffee, PET bottles, recycled glass bottles, crowns, labels and caps to its global operations.

It was only in India that Coca-Cola had a mix of its own bottling facilities and arrangements with independent bottlers. CCI had 27 owned units, 17 franchisee units, and 22 co-packers.

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Background Note

Coca-Cola, reentered India in 1993, after having withdrawn from the country in the late 1970s, in the wake of the Foreign Exchange Regulation Act (FERA) of 1973. Coca-Cola's reentry was driven both by competitive factors and the company's own global plans. Global rival Pepsi had entered India in 1990 and by 1993 had captured a 25% market share.

Coca-Cola could not stay behind. Coca-Cola's exit from the country in 1977, after a 25-year presence, had been discordant. Following the introduction of FERA, the Reserve Bank of India (RBI) asked multinationals operating in non-strategic industries like consumer goods to reduce their equity stake to 40% or below. Coca-Cola offered to hold 40% equity in its bottling and distribution units, but refused to dilute equity in its technical and administrative unit.

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1] Named after Robert W Woodruff, one of Coca-Cola's most influential chairmen who led the company for over 50 years.
2] Basu, Indrajit. "Coke bubbles after a decade in India," www.atimes.com, 26^th April 2003.

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