Coca-Cola cannot speak is name as Pepsi enters Hindi

Coca-Cola Co offered to buy Rajesh Yadav a refrigerator for his New Delhi
store if he would sell only the company’s drinks.

He kept his part of the bargain and lines of coke and diet coke cans
glisten behind the glass screens of the fridge. A red and white banner with
Bollywood film star Aishwarya Rai chugging a bottle of the cola, adorns his
store front. Yet Yadav doesn’t mention his partner when he describes his
shop.

“I sell Pepsi and cigarettes”, said Yadav in Hindi elongating the first
syllable to pronounce the word “pay-psee”.

Yadav isn’t reneging on his deal with Atlanta-based Coca-Cola. Pepsi

became a common synonym for cola in India’s most widely spoken
language after having the market to itself for three years until 1993. Pepsi
co Inc’s linguistic advantage translates into higher sales. Its cola brands
market shares is 73% greater than cokes, according to euro monitor a
consulting firm.

Coca-Cola pulled out of India in 1977 after a change in government

regulation would force it to partner with an Indian company and share the
drinks secret formula. In 1988, Pepsi co formed a joint venture with two
Indian companies and introduced products under the Lehar brand. Lehar
Pepsi was introduced in 1990. Coke re-entered the market in 1993, after
Indian regulations were changed to allow foreign brands to operate
without Indian partnerships.

Catch-all term

“Pepsi got here sooner, and got to India just as it was starting to engage
with the west, and with western products”, said Lalita Desia, a linguist at
Kolkata’s jadavpur university who studies how English words enter Indian
languages. “And with no real international competition, ‘Pepsi’ became
this catch-all for anything that was bottled, fizzy and from abroad”.

In much of the Hindi-speaking belt of north India, home to three of the five
most populous states, children begging at street corners will point to
bottled juices inside cars and pled for “Pepsi”. Mahipal Singh, a 42 year
old truck driver who flies a route between Delhi and Bihar terms his rest
stops “Pepsi-wepsi” breaks, regardless of what he is drinking.

“saying Pepsi” connotes getting a soft drink”, said Kiran Bhushi, an

anthropologist at Indira Gandhi national open university whose research is
focussed on consumption patterns of India’s middle class and as consulted
for both companies. “How exactly does someone like coke dislodge this
idea from a consumer’s brain?”

Evangelical task

In addition to competition from Pepsi, Coca-Cola, which was unprofitable

in India for 15 years, has to contend with consumer preferences for other
drinks. About 90% of India’s beverage market is composed of tea, milk
and Coffee based drinks with bottled soft drinks holding less than 5%,
according to Harish Bijoor, who runs a brand consulting and strategy
business out of Bangalore. The company relies on drinks other than Coke
to be the countries top beverage seller.

“Cola in India is still an evangelical task, because it’s not a lifestyle habit
yet”, said Bijoor.

Coca-Cola needs growth in overseas markets to offset at least 4 years of

declining sales volumes for its soft drinks in the US. Sales by case volume
grew 29% in China and 20% in India last year. The company announced in
Mar 2009 that it would invest $2 Bn in China over a 3 year period.

India’s economy expanded 8.8% in the 3 months through June the fastest
place in 2 ½ years. Growth in the US the biggest market for both Coke-
Cola and Pepsi Co, slowed to 1.6%.

Sales Growth

Still, sales by volume in India surged 31% in 2009, Coca-Cola CEO, Muhtar
Kent said in Feb without providing specific numbers. Indian sales of Coca-
Cola, Diet Coke and Coke Zero grew 25% according to the company’s
annual report. Coca-Cola last year turned a profit in India for the first time
since re-entering the country in 1993 after a 16 year absence, according
to Kamelsh Sharma, a New Delhi – based Spokesman.

While Coca-Cola used the cola brand to drive the market share in other
countries, the company’s top 3 products in India by sales volume are
Kinley bottled water, Thumps-Up cola and Sprite, according Euromoniter.
Thumps-Up, a Lemon during called Limca and an orange drink called Gold
Spot were acquired by Coca-Cola in 1993.

“Pepsi is bigger than Coke as a brand, but coke as a company as very

smartly introduced other brands that have done very well”, said Bijoor the
consultant.

Coke’s Strategy
That’s Coca-Cola’s strategy, said Atul Singh the company’s president for
India and South-West Asia.

“We want every part of our portfolio to grow so that any consumer, at any
occasion, anywhere in India makes a choice to drink a Coca-Cola product”,
he said. He said he was not aware that Hindi-speaking consumers often
use ‘Pepsi’ as a generic term for colas.

New York- based Pepsi Co will invest ‘aggressively’ in emerging markets,

according to CEO Indrs Nooyi, who was born in India. Its sales in Asia,
West Asia and Africa grew 12% in 2009. The company, which is also the
world’s largest snack-food maker, in May said it will invest $2.5 Bn in
China over three years. Retail sales of its products in India, including Frito-
Lay potato Chips, Quaker Oats and Fruit juices such as Tropicana, are
worth $ 1.5 Bn. Pepsi Co add $43.2 Bn sales last year.

Big Positive

“The Pepsi brand becoming the default name for the cola category is
certainly a big positive”, Sandep Arora a company’s spokesman, said by
E-mail. “It can also be double-edged sword if the marketer is not able to
differentiate the brnad from the rest of the category.”

Coca-Cola has run an advertising campaign called “Thunda Matlab Coca-

Cola”. “North Indians speaking Hindi regularly use ‘thanda’ the word for
cold as a noun when offering someone a drink.

“It was definitely a good idea”, said Bhushi, the anthropologist. “If pepsi
means Cola then emphasizing that a ‘thanda’ means Coke is perhaps the
best way to gain control of the vocabulary.”