POSTED: 01:30 a.m. HST, Sep 12, 2010
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 storefront. 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. The word "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. PepsiCo Inc.'s linguistic advantage translates into higher sales. Its cola brand's market share is 73 percent greater than Coke's, according to Euromonitor, a consulting firm.
Coca-Cola pulled out of India in 1977 after a change in government regulations would have forced it to partner with an Indian company and share the drink's secret formula. In 1988, PepsiCo 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.
"Pepsi got here sooner, and got to India just as it was starting to engage with the West, and with Western products," said Lalita Desai, a linguist at Kolkata's Jadavpur University who studies how English words enter Indian languages. "And with no real international competition, 'Pepsi' became this catchall for anything that was bottled, fizzy and from abroad."
In much of the Hindi-speaking belt of northern India, home to three of the five most populous states, children begging at street corners will point to bottled juices inside cars and plead for "Pepsi." Mahipal Singh, a 42-year-old truck driver who plies a route between New Delhi and Bihar, calls 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 focused on consumption patterns of India's middle class and has consulted for both companies. "How exactly does someone like Coke dislodge this idea from a consumer's brain?"
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 percent of India's beverage market is composed of tea, milk and coffee-based drinks, with bottled soft drinks holding less than 5 percent, 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 country's top beverage seller.
"Cola in India is still an evangelical task, because it's not a lifestyle habit yet," Bijoor said.
Coca-Cola needs growth in overseas markets to offset at least four years of declining sales volumes for its soft drinks in the U.S. Sales by case volume grew 29 percent in China and 20 percent in India last year. The company announced in March 2009 that it would invest $2 billion in China over a three-year period.