Pepsi's Strategy in Entering India

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PepsiCo had been trying to enter the Indian market for quite some time with no success. In 1988 Pepsi received a letter from George Fernandes, the General Secretary of one of the country's leading political parties, Janata Dal. He wrote, "I learned that you are coming here. I am the one that threw Coca-Cola out, and we are soon going to come back into the government. If you come into the country, you have to remember that the same fate awaits you as Coca-Cola." This scared PepsiCo a bit knowing that their rival was forced to leave the country in 1977 after the Janata Dal came to power. PepsiCo had to think of a way to get in without facing the same consequences Coca-Cola had to face. In May 1985, PepsiCo joined with one of India's leading business houses, the R P Goenka (RPG) group, to begin operations in the India. The company, along with the RPG group company Agro Product Export Ltd., planned to import the cola concentrate and sell soft drinks under the Pepsi label. PepsiCo's decision linked its entry with the development and welfare of the state was aimed at winning the government over. The fact that Punjab boasted a healthy agricultural sector played a role in PepsiCo's decision. PepsiCo claimed that it would play a central role in bringing about an agricultural revolution in the state and would create many employment opportunities. It promised to create 50,000 jobs in the nation. Pepsi began by setting up a fruit and vegetable processing plants at Zahura village in Punjab's Hoshiarpur district. The plant then was focused on processing tomatoes to make tomato paste. Pepsi had a tough time convincing farmers to work for the company. Its experts from the US had to interact extensively with the farmers to explain how they could benefit from working with the company.
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