In 1993, a team of
The proprietor, who was in his 50s, started crying and called out to his son in the local language. The young man ran upstairs and
brought down a 20-year-old
“He’d been keeping them up in his attic, waiting for that
moment,” recalls Nitin Dalvi, who at the time was head of marketing for
A few weeks later – on Oct. 24, 1993, to be exact –
This was great news to the millions of consumers who had
missed their beloved beverage since 1977, when a newly elected government
demanded that The
In the early-1990s, when India began to open up its economy to foreign investments, Coke started plotting a strategy to re-enter the fast-growing market. When an initial joint venture with former Britannia Industries Ltd. chairman Rajan Pillai failed to take off, the company’s attention shifted to the Parle Group, which commanded 60 percent of India’s soft drink market. In a landmark strategic alliance, Coke acquired Parle’s stable of brands – including the popular Thums Up spicy cola – and gained access to its nationwide bottling and distribution infrastructure.
The deal gave Coke a huge head start. "Just like that, we acquired a 60 share," Neville Isdell, then-president of Coke’s Northeast Europe and Middle East Group, told Journey magazine soon after the agreement was signed.
We caught up with three instrumental members of the team
that helped architect Coke’s return to India and lay the foundation for what is
now the company’s seventh-largest market: former
Raja: Coke, at that stage, had expanded its global business footprint around the world. India was deemed the last frontier, and it was an imperative to get back. We had to not only get permission to restart our business, but also to develop a strategy to leapfrog the competition. I was determined for Coke – given its history in India – to remain in control of our destiny. That was the guiding principle I pursued.
Neville Isdell and I
agreed that we should acquire Parle’s soft drink trademarks: Thums Up, Limca (a
cloudy lemon soda), Citra (a clear lemon soda), Gold Spot (an orange soda) and
Maaza (a juice-based mango beverage). Inheriting these brands, plus their franchise
system and distribution infrastructure, gave us market leadership on day one. It
gave us a profitable business to build on. We had market-leading brands and the
international brands of The
It was risky, however, because we were acquiring competitive brands, which was unprecedented for the company as an entry strategy. Neville and I agreed to ask for forgiveness later if it didn’t work out – rather than asking for permission up front. Before signing the agreement, we had to get approval from our Board of Directors. Roberto Goizueta categorized it as the deal of the decade.
Dalvi: For the first time in the history of the company, we had two sugar colas in the same market. Coke was a worldly, sophisticated brand that had been gone for 17 years, so it was like an old friend coming back. Thums Up, on the other hand, was a grassroots favorite… a true fighter brand with a strong sense of nationalism. We wanted to keep that aura. The marketing challenge was having both brands co-exist in a way so that one plus one equaled three and to outflank our competitor. We had to appeal to people who fondly remembered the taste of Coke and leverage them as brand advocates. At the same time, the future was clearly in recruiting new drinkers, so we were laser-focused on youth. An entire generation had grown up without Coke. Some may have tried it while traveling or even tasted a product that had been smuggled into India, but the vast majority had just heard of the brand. Virtual consumption, as we called it. We saw nothing but upside.
Raja: Consumer studies revealed that Thums Up was preferred, by far, over our primary competitor. That told us we had a loyal consumer base that would not switch, and that we couldn’t afford to overlook Thums Up to promote Coke. One major advantage we had was that a generation of young Indians was drinking Thums Up, which has a very unique taste profile and strong brand personality. With Thums Up in our stable, we could launch a two-pronged strategy against our competitor. We positioned Coke as an aspirational, international brand, and continued to market Thums Up as a national revered icon.
Ninan: The dominant package size at the time in
India, 250 ML, was sold for 5.5 Rupees. We decided to re-introduce
Raja: We offered more product for less money. Reporters initially told us, “300 ML is too much for the Indian consumer to drink. They can barely finish a 200 ML bottle!” When I took them around in Agra, they were surprised to see crates filled with mostly empty Coke bottles. “You don’t have to finish it to try it,” I told them. “But you have to like it to finish it.”
Ninan: Demand for the
product was incredibly high.
Raja: We made the decision to launch in Agra for several reasons. First, a new plant was being built nearby by a bottler who was very eager to become a Coke franchise bottler. Also, the historical significance of the Taj Mahal – one of the nine wonders of the world – would signal that Coke was returning to India. Finally, from a marketing standpoint, we wanted to introduce a series of innovations in a mid-sized market so we could test and then modify our plans, if necessary, before reaching bigger markets.
Ninan: The Agra launch
did more than reintroduce India to
Dalvi: We approached everything with humility. Many people saw our return as a big multinational coming in and threatening the local products they knew and loved. We were very mindful of that. We couldn’t do a lot of national advertising because we didn’t yet have a system in place to deliver the product on that scale. We launched one market at a time – approximately 17 cities in 17 months – and went as local as we could with our advertising.
Ninan: We knew the best way to celebrate Coke’s return would be to organize a Juloos, a traditional Indian procession. So, in every market, a parade of trucks, vans, trolleys and local bottler sales people sampled free product along the main thoroughfare. The idea of a Juloos was provided by Win Mumby, a member of the India Task Force that visited India in the summer of 1992 to develop a re-entry strategy for the company into India. This established to the retail trade that “Coke is back and we’re here for good” and generated a lot of positive PR. There were huge expectations among media and the public. To them, the return of Coke represented the opening up of India’s economy to the Western world. TV networks, including CNN in some cases, covered these market launches and provided a lot of free publicity.
Raja: We inherited 55 Parle bottlers as franchisees. All of them had to invest in facility upgrades to meet our quality standards before launching. Every month, one or two plants came onboard. For the launch in Calcutta, I suggested to the local franchise bottler that he invite the head of Parle to the inauguration so he could see the difference. He came and was shocked. He said: “Jay, you have converted a cockroach into a butterfly.”
Dalvi: Our team strongly emphasized the importance of building the right foundation. It could have been easy for us to simply blend in by following what the local market was doing in terms of quality, packaging and advertising standards. We were always driven by a focus on doing the right thing for the business over the long term.
Raja: Sales volume jumped 50 percent in the first two years, and we captured almost two-thirds of the market. Bottlers saw a 40 percent volume increase, on average. They were making a smaller margin than what they were used to, but the incremental volume made up for that.
Leading Coke’s return to India was a once-in-a-lifetime opportunity. I was the first pair of boots on the ground, and I built a team of young professionals to start a business from scratch. I’d tell my team that we were going straight from infancy to adulthood, bypassing adolescence. Coke’s global story wouldn’t be complete without a return to India.
Dalvi: In my 30 years at
Coke, that assignment was, by far, the highlight of my professional career. The
chance to create something out of nothing… to launch the world’s largest soft
drink brand in potentially the largest market in the world… will likely never
happen again. We knew India would be massive for Coke. There was no doubt in
our minds it would be a billion plus-case market. The only question was how
fast we could get there. You can’t say that about every market.
Where Are They Now?
Jay Raja remains co-anchored in the U.S. and India while maintaining his primary residence in Dallas, Texas, where he devotes his time to academic pursuits in an advisory capacity and as visiting faculty to graduate business schools. He spends three months a year in India.
Nitin Dalvi is group director of Marketing Innovation Initiatives for
Abraham Ninan is group director of Category & Brand Insights (Still