Case 2: Coca-Cola and PepsiCo: Facing Competition from Regional Brands in India (20%)

Between 2014 and 2016, the market share of Coca-Cola had declined from 35.5% to 33.5%. Concurrently, the market share of PepsiCo had dropped from 23.2% to 22.2%. These declines in market shares for the two globally dominant beverage giants partly reflected an overall downturn in the market. However, they also reflected regulatory changes, indigenous competition, and market transition to a greater global awareness. In the 2016-2017 timeframe, the overall market was estimated at about 22,000 crore.[1] It was dominated by Coca-Cola and PepsiCo, whose sales volumes were roughly 9500 crore and 6500 crore, respectively. Regional brands collectively held about 15-17% of the domestic market. The Indian market still reflected a high preponderance of very small providers like Fresca juices, with annual turnovers of 5-30 crore.[2] they numbered in the hundreds and represented a formidable force to both the global giants as well as the large Indian beverage providers. These small providers tended to have an average of 30% of their products offered for about 10.

The Indian beverage market was described as one of persistent cutthroat competition. Regulatory influences became more prominent when the global providers, especially Coca-Cola, were deemed to be using water at a rate that depleted some regional sources to the point that farmers' capability to produce was significantly and adversely impacted. Cultural change too was affecting the beverage market. Indian consumers, in line with global trends, were showing much greater interest in healthy drinks. This was reflected a raft of new fruit drinks that were taking hold across India. That shift resulted in radically different growth trends for the traditional carbonated drinks versus the juice segment. The carbonated segment in India grew at 12.8% compounded annual growth rate (CAGR). The juice segment posted a growth rate of 27.3% over the same period. Against this backdrop of fierce and persistent competition, all beverage providers, large and small, had to wrestle with decisions like new plant construction, product line changes and refresh, packaging, and marketing directions etc.

1. Can the success of the smaller Indian beverage brands be viewed as an acceptance of global competition?

2. Is the fierce competition in the beverage sector representative of Bottom of the Pyramid (BOP) sensitivities by the participating firms?

3. Of the trends and drivers promoting new thinking in global competition, as defined in LO 15.7, which do you think are most instrumental in the patterns of changing the Indian beverage market?

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So, the question is, can King Tide Gear now expand beyond yoga wear and be successful

with aiming its products at the mass market.

[1] Economic Times / India Times

[2] 1 crore = 10 million rupees ()