Case Studies

How Coca-Cola lost India, and captured it again (And the battle for Africa)

How Coca-Cola lost India, and captured it again (And the battle for Africa)

Coca-Cola, sometimes described as capitalism in a bottle, is probably the world’s most iconic brand. According to BC Digest, it took Coca-Cola almost half a century to capture India, one of the biggest markets on earth.

Coca-Cola’s entry into India, like in many other markets, came on the back of pure opportunism. India had become independent in 1947. and within three years, Coca Cola had already established a bottling plant in New Delhi.

Now, India’s first independent government was determined to take India down the path of socialism, which of course meant supporting the local industry at the expense of foreign companies. This was obviously bad news for Coca-Cola, a glaring symbol of capitalism. mostly because it had very few sympathizers in the Indian government.

In response to socialism, Coca-Cola’s idea was to become entrenched in Indian culture before the government could really respond. After all, in those early years, independent India had much bigger problems to deal with than a foreign fizzy beverage in a curvy bottle.

Thus, while India was recovering from a bloody conflict with Pakistan, Coca-Cola was busy setting up a distribution network across the country. Coca-Cola’s timing was perfect. Just a few years later, Pepsi was denied entry into the Indian market while Coca-Cola was sitting pretty.

“Only 10% of India’s villages had safe drinking water, 90% had access to Coca-Cola.”

How Coca-Cola lost India, and captured it again (And the battle for Africa)

Coca-Cola’s success in India, however, would eventually become its undoing. As successive governments leaned ever further towards the socialist left, Coca-Cola was strongly disliked by Indian politicians.

A favorite statistic of theirs was the fact that while only 10% of India’s villages had safe drinking water, 90% had access to Coca-Cola. In the eyes of a protectionist  government, Coca-Cola being more accessible than water was a very bad sign. But overthrowing the powerful American company would not be easy.

Coca-Cola had indeed become entrenched in Indian society, and it would take a very severe crisis to bring it down. Such a crisis did happen in the mid-1970s when India was actually on the brink of revolution following the third war with Pakistan and almost dictatorial control of government by Indira Gandhi.

Civil unrest against the socialists was growing out of control. Nationwide strikes and political assassinations were becoming the norm. And to deal with that, Gandhi issued a state of emergency between 1975 and 1977. This dark period of Indian history saw thousands of politics thrown in jail, a total suspension of civil liberties, and government control over the press.

It also presented a great opportunity for the government to finally throw Coca-Cola out of India. Amidst the chaos, the socialists enacted a law that prevented foreign companies from owning more than 40% of any business in India. Coca-Cola would have to effectively give up its ownership.

And more importantly, it would have to surrender its secret recipe and to make it locally in India rather than importing it from the US. Faced with little choice, Coca-Cola left India in 1977 alongside more than 50 other American companies.

India vs Coca-Cola: Part 2

How Coca-Cola lost India, and captured it again (And the battle for Africa)

When the US business left India, this created a huge void in the Indian soda market, not just for Coca-Cola, but for Sprite as well. The local competition was, of course, happy at this opportunity. And over the next decade, they expanded rapidly filling the market with substitute products. Even the government cashed in by grading a state-sponsored Cola called Double Seven to commemorate the end of the emergency.

Coca-Cola, however, was not so easily defeated. And when the socialists finally lost its grip on India in 1991, Coca-Cola came back with a vengeance. Riding a wave of economic liberalization, Coca-Cola re-entered India in 1993.

That very same year, they acquired the most popular brands that have developed in their absence. In fact, All the four most popular sodas in the country were purchased by Coca-Cola for $40 million, giving the company a staggering 50% market share from day one.

Since then, Coca-Cola’s domination has only increased and today their share has arisen to just over 60% with its only real competitor being Pepsi at around 35%. So, despite decades of political opposition, Coca-Cola did eventually conquer India.

Coke’s PR strategy in Africa and the sugar question

In Africa, Coca-Cola’s story is also colorful though not as dramatic as the Indian conquest.

A taste of Coke can be seen in the comedy “The Gods have fallen on their heads”. In this South African film released in 1980, an airplane pilot flying over Africa throws a bottle of Coca-Cola over his cockpit. The object then lands in the middle of a Bushmen village. The members of the tribe, not knowing the famous soft drink or the glass bottles, see it as a gift from the gods that will turn their lives upside down.

The first Coke was served in Africa much earlier in1928. Coke has deployed a proven marketing and PR strategy in Africa:

  1. Think local, act global.
  2. Emotional PR and marketing, through sports, sponsorships and “soft PR.”
  3. Government relations and strong lobby.
  4. Strong distribution and retail network.
  5. “If you can’t beat them, buy them.” Coca-Cola has spent billions of dollars in acquisitions across the continent. Its latest catch is TGI’s Chi Ltd(Chivita), Nigeria’s biggest juice manufacturer, which had previously been a thorn in Coca-Cola’s marketing flesh.
  6. Diversification: Coca-Cola has redoubled efforts to expand beyond its core soda brands at a time when health authorities in many parts of the world are singling out sugary drinks for contributing to rising obesity and diabetes.

The World Health Organization commission recommended that governments consider special taxes on sugar-sweetened beverages, following the example of Mexico, which introduced levies on soda and junk food in 2014.

The commission estimated the number of overweight children in Africa has nearly doubled to 10.3 million since 1990, and over 20% of the adult population are One in five adults and one in 10 children and teenagers are projected to be obese by December 2023 in 10 high-burden African countries if no robust measures are taken to reverse the trends.

Shifting the conversation away from health has also been a critical component of Coca-Cola’s PR strategy in Africa and around the world. How long can they continue to dodge this bullet? Time will tell.

Article Sources:

BC Digest

Le Journal Afrique


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