Beverage Industry in India: Coke and PepsiCo
With the increase of globalization, competition for international as well as local market share p in the beverage industry has been augmented significantly. Emerging markets such as India have seen global brands struggle to make a mark as the local manufacturers have gained increased loyalties. Coke and PepsiCo represent the leading distributors in the beverage industry in India; however, this comes because of changing their strategies. With a market revenue of $230 million, the Indian beverage market hosts a multitude of opportunities that are yet to be explored.
Indian Beverage PESTEL Analysis
Similar to other counties globally, political influence is a significantly essential part of businesses in India. As indicated by Eswaran and Kotwal (2014), the political society in India is significantly plural, considering it is perceived as the largest democracy globally with a multi-party political model. Concerning the soft drinks industry, the Indian government has opened its borders to foreign manufactures by reducing corporate taxes. According to Street (2015), the policy of making the soft drinks market global, is because the government finds an avenue to stimulate employment. In 1990, about 45% of the beverage industry in India was made up of local manufacturers; currently, Caca-Cola Company and PepsiCo. Inc. controls 57% of the market (Yach et al., 2017). The country introduced a minimum wage of $2.40 per day, which makes finding cost-effective workforces easier thus improving the localization of global brands (Street, 2015).
Currently, the beverage industries account for $230 million in the $65 billion food processing industry value (Singh & Singh, 2016). In retrospect to volume, carbonated beverages and juices market is estimated at 84 million crates a year ($1billion) (Singh & Singh, 2016). The beverage sector in India is vibrant due to an increase in employment opportunities. As indicated by Cassen (2016), people’s income is constantly rising a factor that has translated in high profits to the soft drink industry.
India is a mixture of society and culture. Currently, India is believed to have the most diverse culture in terms of social class, family type, language, values, and belief as a country. According to Chandra et al, (2016) despite Hinduism being the largest religion in India it is only one of other well-known and practiced religions such as Islam, Christianity, as well as Buddhism. As indicated by Cassen (2016), out of this diversity, beverage companies have come up with two sales boom periods namely; during the summer period and cultural festival of Navratri. This traditional Gujarati festival is celebrated for nine nights in the district of Gujarat, in the western part of India (Chandra et al., 2016). Additionally, the city of Mumbai also has a notable Gujarati population that is considered part of the target audience for this campaign.
India is a technological country and this makes it easier for manufacturers to produce, distribute, as well as market their products. The beverage industry in India is oligopolistic, meaning there are limited barriers to entry. This makes competition aggressive particularly when most of the products are not significantly differentiated. Coca-Cola and PepsiCo products have gained a significant advantage due to the final, as well as other resources that are at the disposal of these entities (Anderson et al., 2016). For instance, Pepsi and Coke use digital billboards as part of their brand promotion campaigns
The food and beverage regulatory body in India has stringent regulations regarding FSSAI ingredients. In the past, Coke had legal issues that saw it leave the country’s markets; the issue arose from the government’s insistence on knowing the company’s secret syrup (Bardhan, 1999). As cited by Cassen (2016), India has some of the most routinely analyzed beverage regulations in Asia, as a majority of the population consumes the product. Over the last decade, there have been minimal changes made on the regulations, meaning companies are provided with some room to enter the market.
India’s beverage industry is focused on business sustainability thus as indicated by Sweet and Meiksins (2016), there are high expectations as well as standards in regards to waste disposal. The Indian government has always played a significant role in improving the nation’s waste management systems thus enacted stringent regulations in recycling. Beverage companies have been forced conduct clean up campaigns in order to avoid fines.
As aforementioned, the beverage industry in India is significantly competitive while the products are not differentiated. Subsequently, this makes brand marketing significantly important in improving a company’s competitive advantage. For PepsiCo and Coca-Cola, TV campaigns have been the primary means of communication to the masses. Additionally, the companies have involved themselves in community CSR projects such as the “Keep It Cool” summer campaign featuring 7UP by Pepsi that was designed to increase brand awareness (Choudhury, 2015). From the Integrated Marking Communications (IMC) analysis, the companies have employed the use of both rational as well as emotional marketing campaigns in order to appeal to the local population. Other than aggressive marketing campaigns, both PepsiCo and Coke have launched differentiation strategies in order to increase market share.
The image above is a graphic representation of the market share representation of both Coke and PepsiCo products in form of differentiation through products. The two companies have differentiated or segmented the market through the production of a variety of products. From the data presented in India, the ‘Thums Up’ is the leading product in sales as it is an Indian product made by Coke. As indicated by Choudhury (2015), Coke learned that the Indian market has an appeal for local branded or manufactured products thus making it the most successful company in the country.
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