Coca-Cola established its first bottling factory in India in 1950, just 3 years after becoming independent in India. But soon thereafter, India turned to socialism and began nationalizing several private companies, including Coca-Cola. So how did Coca-Cola escape the claws of India's socialist government and gain a 60% share in India's beverage market?
Coca-Cola: American drink that is capitalism in a bottle. During the 20th century, as capitalism spread around the world, Coca-Cola also reached a point where the only place left where you cannot meet today is North Korea. But Coca-Cola has had an easier time in some places than others and this, we are going to see that India, one of the largest markets in the world, took almost half a century to capture India.
Coca-Cola's entry into India, like many other markets, resulted from pure opportunism. India became 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 on the path of socialism, which meant supporting the local industry at the expense of foreign companies. In other words, Coca-Cola had some sympathetic people in the Indian government, but it did not shut down the company. The idea of ​​Coca-Cola had to be incorporated into Indian culture before the government could respond. After all, in those early years, independent India had enormous problems to deal with foreign Fiji drinks. Thus, while India was recovering from a bloody conflict with Pakistan, Coca-Cola was busy establishing a distribution network across the country.
The time for Coca-Cola was right: Pepsi was denied entry into the Indian market only a few years later, while Coca-Cola was forming a bank. However, Coca-Cola's success in India will eventually remain undone.
As successive governments leaned towards the Left, Coca-Cola became public enemy number 1 in the eyes of Indian politicians. His favorite statistic was that only 10% of the villages in India had safe drinking water, with 90% having access to Coca-Cola. In the eyes of a protectionist government, Coca-Cola was more accessible than water, a very bad sign, but it would not be easy to overthrow the powerful American company. Coca-Cola pervades Indian society and there will be a very serious crisis to bring it down. There was a crisis in the mid-1970s when India was indeed on the verge of revolution.
After the Third War with Pakistan and almost dictatorial control of the government by Indira Gandhi, civil unrest against socialists was spiraling out of control. Nationwide attacks and political assassinations were becoming the norm and to deal with this, Gandhi issued a state of emergency between 1975 and 1977. Thousands of political opponents were jailed in this dark period of Indian history, total suspension of civil liberties, and the government assault press. This gave the government a huge opportunity to throw Coca-Cola out of India. Amid the chaos, the Socialists enacted a law, which prohibits foreign companies from owning more than 40% of any business in India. Coca-Cola would have to relinquish its ownership effectively and more importantly, instead of importing it from the US, surrender its secret recipe and make it locally in India.
Faced with little choice, Coca-Cola left Indian 1977 with more than 50 other American companies, leaving a huge void in the Indian soda market not only for Coca-Cola but also for Sprite. Of course, the local competition was happy on the occasion, and over the next decade, they expanded rapidly, filling the market with substitute products. Even the government cashed in by creating a state-sponsored cola, called Double Seven to commemorate the end of the Emergency.
However, Coca-Cola was not defeated so easily, and when the Socialists lost their grip on India in 1991, Coca-Cola returned with a vengeance. Riding a wave of economic liberalization, Coca-Cola re-entered India in 1993, and in the same year, they acquired the most popular brands that had developed in their absence. All four previously reported sodas were purchased by Coca-Cola for $ 40 million, giving the company a 50% market share from day one.
Since then Coca-Cola's dominance has only increased, and today their share has grown to only 60%, with its only real competitor being Pepsi at around 35%. So despite decades of political opposition, Coca-Cola eventually led India to victory, and the way it did it was an honest move to power.
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