Pepsi and Coca-Cola´s Difficulty Entering the Indian Market

997 WordsJun 19, 20184 Pages
For many years, the rest of the world has assumed that India’s governing body is a closed minded regime, avoiding outside investments almost entirely, especially consumer good. This was an obvious obstacle for both Coca-Cola and Pepsi Co. when contemplating entrance into this new market. Although Pepsi had not attempted to enter the market before 1986, Coke had been there many years before, since 1958 but was forced to leave, in 1977, as a result of political actions and policies. This is an obvious example of how political actions and policies can affect, and have affected, the market for soft drinks in India. Therefore, Coca-Cola’s relationship with the Indian government was tarnished, which made it harder for Coke to re-enter. Coca-Cola…show more content…
This is obviously just one more example of how entry into the soft drink market in India is very difficult. After the government impediments and policies discussed above, there had not been any for some time; until 1996, when Coca-Cola requested permission from the Indian Government to increase its share in the Indian market. This proposition from Coca-Cola was granted, but at the same time they had to agree to sell 49 percent of equity to Indian investors. Pepsi Co. on the other hand, was not held to the same terms as Coca-Cola because they entered the Indian Market in a different time period and with a different agreement. So as a result, they were exempt from what was to come. Since Coca-Cola decided to agree to the terms above, they were obligated to sell off 49 percent of its equity within two years, but they were unable to fulfill this obligation. Instead, they filed for an extension, which wasn’t approved until 2001. At this point, Coca-Cola did not feel as if they could fulfill the obligation so they again filed for another extension until 2007 because they felt the corporation would be in a better position to fulfill the obligation, but this was obviously disapproved by the Indian government. This all was a result of government rules being inconsistent since things were so unstable during the early 1990’s. This was shown when other companies, for example Candbury-Schewepps, were allowed to buy back

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