Soft drinks in India: Pepsi

Soft drinks in India is a INR 11,000 Crore industry1. The rising mercury levels have ensured that the Indian soft drinks industry is going through a healthy phase wherein, it registered an impressive growth of 24. 6% in the year 2011/12. Carbonates had a growth of 13. 6% growth, Bottled water saw an incredible 34. 3% growth, Fruits and vegetable juices registered a growth of 29. 7%, Sports and energy drinks saw a growth of 17. 2%. PepsiCo operates in these product lines and the impressive growth numbers were of great encouragement for the soft drinks industry in general and PepsiCo in particular.

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The key players Coca Cola and PepsiCo actively revived their old brands that were popular in the 1980s in India. Coca Cola revived its old brand Citra within the lime carbonates category. While Coca Cola already had Sprite and Limca in the lime carbonates category, Citrus was priced at 20% cheaper than them. Coca Cola also reintroduced its brand “Rimzim”, a masala soda with cumin and spices. PepsiCo reciprocated by reviving its popular brand Duke in Mumbai, where it is very well known. Duke was launched in four flavours.

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Since PepsiCo and Coca Cola have almost similar product lines, companies launched new products and were involved in brand extensions in order to differentiate from the others. PepsiCo’s Mirinda was the answer for Coca Cola’s Fanta in the orange category. Lack of differentiation in the Orange category lead PepsiCo to launch two new varieties of Mirinda- “Mango Orange” and “Orange Masala” in order to gain traction among the consumers. PepsiCo’s launch of 7up lemony bite in Punjab was to counter Limca.

Tata Gluco + was launched by NourishCo ( A joint venture between PepsiCo and Tata ), a lemon flavoured refreshing and recharging beverage. Danone and Narang Beverages partnered to launch B’lue, a water-based restorative drink. Companies are constantly innovating to come up with new products with greater benefits that will help the companies differentiate themselves in the soft drinks industry. The soft drinks industry in urban India is reaching maturity, which is forcing the companies to look at the rural market as the next bastions of growth. Urban consumers consider carbonated soft drinks unhealthy.

There is an increased traction for fruit and vegetable juices among the urban consumers. PepsiCo’s Tropicana, Coca Cola’s Minute maid and Dabur’s Real are addressing this surge in the demand for fruit and vegetable juices. As far as the rural markets are concerned, a significant 21% of the off trade volume sales in 2012 came from these markets. Companies are increasing their focus on rural India. As an indication for the increased focus, Coca Cola started distribution of solar powered coolers in rural areas which can store up to two crates of Returnable Glass Bottles (RGBs). Competitors:

The Indian soft drinks industry is dominated by PepsiCo, Coca Cola and Parle Bisleri ltd. Coca Cola has 23. 6% of share, Parle Bisleri ltd. has 21. 6% share and PepsiCo has 21. 2%. Parle Bisleri ltd. garners such high volumes solely based on its packaged drinking water brand “Bisleri”. Excluding packaged water, it’s almost a duopoly with PepsiCo and Coca Cola being the significant players in the soft drinks industry. PepsiCo and Coca Cola have similar product lines. Each of them has a brand as an answer for the brand of the other company. To start with, in the cola drinks category,

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