Entry Of Pepsi In India

A study of Pepsi\'s successful entry in India inspite of adverse conditions.

1. A study, by-
Renuka Narang
ITM

2. -George Fernandes,
General Secretary , Janata Dal
Year 1988
“I learned that you are coming here.
I am the one that threw Coca-Cola out,
and we are soon going to come back into
the government.
If you come into the country, you have to
remember that the same fate awaits for
you as Coca-Cola”

3. •The thirst for global presence made Pepsi to venture in
India with already inroads in 150 countries before India.
•The huge consumer base of 850 million in India can
never be ignored, in spite of all the odds
Due to the fate of Coke in India the market entry had to
be prepared carefully.

4. Political environment
Intent of development of local players only
Opposition to promotion of carbonated drinks
Fear of invasion of foreign brand
Legal environment
Severe restrictions in equity through FERA
Dispute in relation to ownership of Pepsi brand
name( foreign name not allowed)
Economic environment
Closed and Forex starved economy
Cold drink industry in nascent stage
Socio cultural environment
Fear of invasion of MNC culture
Fear of impact on Health/diet

5. PepsiCo teamed up with Agro Product Export Ltd., a
company owned by R. P. Goenka.
Objectives put forward to sought permission from the
central government
to promote the development and export of Indian made and agro-
based product
to import cola concentrate and to sell a PepsiCo brand soft drink in
the Indian market
But the Proposal rejected on the grounds that the
import of concentrate could not be agreed to and the
use of foreign brand names was not allowed

6. Proposal:
'Green Revolution' in Punjab which would end stagnation in
Punjab's rural sector and would help in promoting small and
middle farmers.
Argument:
This project will create ample employment opportunities for
the unemployed youth who has taken the path of terrorism and
thereby will help in restoration of peace in Punjab
Outcome:
Argument very well received in the political circles in Delhi
and Punjab which finally led to PepsiCo's* entry into India in
the form of a joint venture with PAIC* and Voltas* as its
partners

7. Punjab boasted a healthy agricultural sector with good
crop record in past.
Punjab being progressive state with larger landside
with farmers
Easy water availability
High unemployment rate

8. The project will create employment for 50000 people
nationally, including 25000 jobs in Punjab alone;
74 percent of the total investment will be in food and
agro- processing. Manufacturing of soft drinks will be
limited to only 25 percent;
PepsiCo will bring advanced technology in food
processing and provide thrust by marketing Indian
products abroad;
State of the art technology would be provided in the
fields of food processing and soft drink manufacturing
at no foreign exchange outflow;
50 percent of the total value of production will be
exported;

9. An agro-research centre will be established by PepsiCo
in consultation with ICAR and PAU;
No foreign brand name will be used for domestic sales;
The export-import ratio will be 5:1 over 10 years, which
means that for every dollar spends in foreign exchange
on this project, the company will ensure an export
earning of 5 dollars for 10 years;
25 percent of the total fruits and vegetable crops in
Punjab will be processed in the project;
A substantial increase in government revenue due to
consumer market expansion and tax collection.

10. •Commitments: Nothing official about it
•Evidence showed that right from the beginning, Pepsi
had no intention of diversification in Punjab but the
real motive was to sell soft drinks.
•It was a tactics played by PepsiCo to get entry in the
domestic market of India
•Thus, Pepsi with its strong market instinct and research
become the powerful player of Indian beverages and
soft drink industry with implying their funda of
GLOCALISATION.
GLOBAL + LOCALISATION = GLOCALISATION

11. Fruit and vegetable plant set up in Punjab
Focus: Processing tomatoes to make tomato paste
Soft drink business launched.
Promised 24000 jobs, actual 909 in first four years
Research Center still waiting
Export target of 50% met by exporting a variety of
Indian products like 'Basmati' rice, Darjeeling tea, glass
bottles and even leather products
Pepsi no longer a joint venture company with its
Indian partners.
Zahura Village formers still awaiting their
compensation of 25 lacs

12. Product
Price
Place
Promotion
Politics
Public Image