In 1993, a team of Coca-Cola sales reps stopped by a café in Pune, India, to let the owner know that the brand would soon return to the market after a 17-year absence.
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 Coca-Cola table and four chairs.
“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 Coca-Cola’s India operations. “He was very emotional and kept telling us, ‘I’m glad you guys are back.’”
A few weeks later – on Oct. 24, 1993, to be exact – Coca-Cola made its official return to India in the shadow of the Taj Mahal. A colorful cavalcade of Coca-Cola trucks, vans and uniformed deliverymen paraded through the streets of Agra to great fanfare, signaling to the world’s second most populated country that Coke was back in a big way.
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 Coca-Cola Company partner with an Indian entity. Coke refused to budge, choosing instead to walk away from a market leadership position in a nation of more than 800 million people.
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 Coca-Cola India CEO Jay Raja, former head of external affairs for Coca-Cola India Abraham Ninan, and Dalvi. They reflected on the milestone, 20 years later:
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 Coca-Cola Company. The 55 bottlers in the Parle system would continue to bottle the brands they were already selling and have the opportunity to produce Coca-Cola brands. We were still in control of our destiny.
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 Coca-Cola in 300 ML glass bottles at 5 Rupees. We up-sized the industry.
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. Coca-Cola was literally flying off the shelves. People were picking it up so quickly that shop owners didn’t have enough time to chill the bottles. That meant consumers were getting warm Coke, which caused them to question whether or not they were buying the same product they remembered from 17 years ago. By the time we got to Chennai, 10 months after launching in Agra, we started chilling the product for three days before delivering to the marketplace. We wanted to remind people of the true, ice-cold taste of Coke, and that was the only way to do that.
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 Coca-Cola. We also delivered 10 industry-first innovations that touched consumers, retailers, bottlers and suppliers and boosted the brand’s visibility in the market.These included the 300-ML “Georgia Green” contour bottle; pallet-loading, open-bay trucks; auto-rickshaws and bicycle pushcarts; the first-ever ‘Dynamation’ digital billboards; image-enhanced graphics on the distribution fleet and retail signage; and four-color heat-fired tiles for kirana stores. We also introduced product coding, which enabled better inventory control, and full-depth stackable plastic crates.
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 Coca-Cola North America.
Abraham Ninan is group director of Category & Brand Insights (Still Beverages) for Coca-Cola North America.
The “golden triangle,” as Kini calls it, is vital. Neither Coca-Cola nor any other company, civil society organization or government entity can expect to solve the problem of water scarcity independently. But when these groups combine resources to create sustainable solutions for the availability, storage and use of water, the results are far more effective than when those sectors of society attempt to fix problems by themselves.
That is what Coca-Cola aims to achieve across the world with its partners, and what Kini and his team are putting into action in India. Using its vast reach and growing knowledge of best practices for water conservation, Coca-Cola India has created a thriving business that engages local communities.
“One of the advantages of being a big, well-known, global brand is that when there are solutions, we can actually help scale those solutions,” Kini said.
Coca-Cola India’s biggest innovations, of late, are results of its engagement with people on the ground; helping them understand a problem and create infrastructure, and allowing them to succeed for themselves.
In India, one of the biggest issues communities face is water storage. The monsoon season, which runsfrom July to September, provides massive amounts of water. When summer arrives, India is faced with insufficient water supplies. So, for centuries, communities built check dams to block the flow of monsoon water runoff so it can be stored year-round. But most rural communities in India have lost the infrastructure, know-how and resources for check dams, leaving them exposed to water shortages.
Anandana, the Coca-Cola Foundation in India, along with local NGO partners, helps groups of villages determine the optimal locations for these dams by using topographical studies and provides financial support to build them. By its latest estimate, Anandana has helped community members build 150 dams across Northern India, creating 13 billion liters of water storage potential, benefiting over 500,000 villagers.
“Typically in CSR efforts, if you come in over the top with a solution that is imposed on a community, it never really works,” Kini said. “So what we learned is that the best programs are the ones where the local community has a sense of ownership for it and the ideas and solutions are carefully evaluated and selected with their input.”
But Kini recognizes that this is only a start. As he points out, the demand for water will continue to rise and, therefore, Coca-Cola must continue to raise the bar for both its business and sustainability programs. He takes criticism in a positive stride, he believes they create an opportunity for the company to collaborate with local people and do better.
How Coca-Cola India Made Water a Top Priority
By: Witt Wells | Aug 26, 2016
Coca-Cola India knew it needed to be more than compliant with government regulations for water stewardship. The company and its bottling partners have helped transform the business into an example for the world to follow.
Venkatesh Kini’s devotion to the natural world of India began long before he started working for Coca-Cola. As a young boy growing up on the country’s west coast, he loved to experience wildlife. He remembers parting ways with his school group during a day at Sariska Wildlife Sanctuary and walking back to the resort alone through the forest. Monkeys rollicked in a nearby river, and birds sang in the trees all around. Decades later, the 49-year-old president of Coca-Cola India still recalls the simultaneous tranquility and exhilaration he felt in that moment.
Kini says he rarely drank cola as a child, as soft drinks were more of a rare luxury and treat, and Coca-Cola was not available in India until many years later. Now he leads the India business unit (BU) for Coca-Cola – the company's sixth-largest market by volume (and growing).
His care for the world has not faded, but the country he has grown up loving continues to struggle with access and availability to water.
India contains 17 percent of the world’s population and only 4 percent of its water. As BU president of a company that has been accused of contributing to water scarcity around the world, it’s as much an opportunity for Coca-Cola India as it is a challenge. Over the past three years, Kini has accelerated the company's movement to be at the forefront of water sustainability efforts in the country.
“I'm a passionate environmentalist myself,” he said. “And what I've observed is that typically environment and economic growth can go hand in hand, but it requires a certain amount of awareness within communities.”
Coca-Cola has often been the target of organizations that hold the view that big business and healthy environmentalism cannot coexist. But in India, the company has created replenishment potential equivalent to 146 percent of the total amount of water used in manufacturing. This is above and beyond the legal requirements.
But for Kini, simply complying with government regulations on water withdrawal isn’t enough. And it isn’t enough for the people of India either.
“Coca-Cola is a very visible user of water," Kini said. "Even if on paper it isn’t a large user of water, perception matters."
Criticism the company has received for depleting water reserves were highlighted by protests against Coca-Cola’s plant in the city of Kaladera, where some studies concluded that groundwater sources had been overexploited. Although Coca-Cola plants use a small amount of water relative to agriculture and some other water users, the company realized its responsibility to be more than just compliant with government regulation.
Coca-Cola has created replenishment potential of around 1,900% of the water used (19 times the water used) by its Kaladera plant as of December 2015. However, earlier this year, the company announced a temporary suspension of beverage production at the Kaladera facility as a part of its focus on consolidation and supply optimization at other facilities. Other regular operations like warehousing and distribution at the plant continue as scheduled. The company retains its license to produce at this plant, should it decide to do so in the future.
Even so, the fact remains that India as a whole is far short of the water it needs, and Coca-Cola’s efforts alone certainly aren’t going to change that. According to Kini, it isn’t enough to “say yes” to water stewardship; the company wants to redefine it.
“We've set the bar for our sustainability efforts well beyond local laws and, in fact, in many cases way beyond global norms and really focused on, ‘What is the impact we want to have in the communities that we serve?’” he said.
Notably, India has recently proposed revisions to water guidelines for industry. As these guidelines develop Coca-Cola will review and adapt policies as necessary.