COMARITIVE STUDY OF SUPPLY CHAIN

MANGAGEMENT IN CACA COLA AND PEPSI

COMPANIES

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 INTRODUCTION

India is going through a retail revolution. All the big business houses are entering this

Sector and it is growing at a very past pace. International giants in this sector like Wal-

Mart, Tesco and Carefour also entered in cash and carry sector. Retail is offering

Tremendous opportunities in employment. However, our country also poses a big

challenge to organized large retailers particularly in food sector. Food being perishable

item, for the retailer to be successful the key is proper supply chain management. The

challenge comes from a number of factors, e.g. huge size and population of our country,

varied culture and hence varied taste, very poor infrastructure like improper roads, bad

connectivity between production centers and markets, lack of proper cold chain facility

like refrigerated transportation, ware-housing etc. Under these circumstances it is

interesting to find out how large organised retailers are coping up with these problems. In

this Project report a comparative study is made in supply chain management adopted by

different players in food and grocery segments like coca cola and Pepsi two joints in cold

drink market

Food & Grocery sector constitutes about 14 % of the organized retailing in India.

Ironically, organised retail is a meager 2% of the total retail sector in India. Howeer this

figure is changing upwards rapidly. Retail, in general, means “ selling in small

quantities”. In a laymen’s parlance retailing is a term which can encompass sale of goods

and merchandise for personal or household consumption either from a fixed place like

market, shops or more recently, departmental stores, supermarket, shopping malls etc. It

all started through small shops selling goods but lately came the huge stores ushering in

retail revolution in India.

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With the development of world and human being, the taste, need and the attitude of

human being also changes. India is one of the common market in the world with a

population of more than one billion. Soft drink is a popular common product which is

generally purchased by consumers for quenching their thirst in summer and also to have

cooling refreshment. As far as the market of soft drinks is concerned, it is facing cut

throat competition from the larger number of soft drinks available in the market. Different

brands are available in every segment of flavors, but the attitudes of the consumers differ

from each other due to several factors. Every company tries to increase their market share

and their sales volume. Discounting system followed by the companies proved to be an

essential factor to boost up the purchases made by the retailers. The companies try to

attract the retailers to purchase more by providing some schemes or incentives or

cash/card discount. If more discount or any other incentive scheme is given to the outlets,

they make purchases to avail that offer. Therefore, it is essential for any company to have

an efficient and effective discounting system. Distribution is the spine of any FMCG

company. The main function of a retailer is to bridge the gap between the supplier and the

customer. The central focus of distribution is to increase the efficiency of time, place, and

delivery utility. For any FMCG product it is essential to have a good distribution network

which should be better than that of its competitors.

Distribution is the key area for any FMCG business. For a smooth distribution network, it

is essential to keep the retail outlets satisfied which in turn mainly depend upon the

profitability. Their profitability is checked by keeping a satisfied profit margin for them.

Apart from that, the company also provides discount on purchase of different pack sizes

to some HVOs which in turn increases their profit margin. Sometimes the company also

provides incentives to the outlets which make frequent and high purchases. To meet stiff

and challenging competition from some of the other brands, it is essential for the

3
company to have an effective and efficient distribution network. Therefore, the company

tries to keep the outlets satisfied by offering discounts and some other incentive schemes

from time to time.

4
 INDUSTRY PROFILE

Barbara Murray (2006c) explained the soft drink industry by stating, “For years the story

in the nonalcoholic sector centered on the power struggle between…Coke and Pepsi. But

as the pop fight has topped out, the industry's giants have begun relying on new product

flavors…and looking to noncarbonated beverages for growth.” In order to fully

understand the soft drink industry, the following should be considered: the dominant

economic factors, five competitive sources, industry trends, and the industry’s key

factors. Based on the analyses of the industry, specific recommendations for competitors

can then be created.

Soft Drink Industry, the production, marketing, and distribution of nonalcoholic, and

generally carbonated, flavored, and sweetened, water-based beverages. The history of soft

drinks in the United States illustrates important business innovations, such as product

development, franchising, and mass marketing, as well as the evolution of consumer

tastes and cultural trends.

Many Europeans long believed natural mineral waters held medicinal qualities and

favored them as alternatives to often-polluted common drinking water. By 1772, British

chemist Joseph Priestley invented a means to synthetically carbonate water, and the

commercial manufacturing of artificial mineral waters began with Jacob Schweppes’s

businesses in Geneva in the 1780s and London in the 1790s. The first known U.S.

manufacturer of soda water, as it was then known, was Yale University chemist Benjamin

Silliman in 1807, though Joseph Hawkins of Baltimore secured the first U.S. patent for

the equipment to produce the drink two years later. By the 1820s, pharmacies nationwide

provided the beverage as a remedy for various ailments, especially digestive.

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Though the drinks would continue to be sold in part for their therapeutic value, customers

increasingly consumed them for refreshment, especially after the 1830s, when sugar and

flavorings were first added. Soda fountains emerged as regular features of drugstores by

the 1860s and served beverages flavored with ginger, vanilla, fruits, roots, and herbs. In

1874 a Philadelphia store combined two popular products to make the first known ice-

cream soda. The first cola drink appeared in 1881.

In the late 1800s, several brands emerged that were still popular a century later.

Pharmacists experimenting at local soda fountains invented Hires Root Beer in

Philadelphia in 1876, Dr. Pepper in Waco, Texas, in 1885, Coca-Cola in Atlanta, Georgia,

in 1886, and Pepsi-Cola in New Bern, North Carolina, in 1893, among others. Reflecting

two of the middle-class mores of the period—temperance and feeling overwhelmed by

the pace and burdens of modern life—early marketing touted these drinks as alternatives

to alcohol and/or as stimulants. Coca-Cola inventor John S. Pemberton's first print

advertisement for his creation read "Delicious! Refreshing! Exhilarating! Invigorating!,"

while Asa Candler, the eventual founder of the Coca-Cola Company, promoted his

product in the years leading up to Prohibition as "The Great National Temperance

Beverage."

The history of Coca-Cola reveals how national markets in soft-drink brands developed.

To limit the cost of transportation, manufacturers of syrup concentrates licensed bottlers

to mix the product, package, and distribute it within a specific territory. Candler

underestimated the importance of the bottling side of the business and in 1899 sold the

national rights to bottle Coke for a fairly small sum to Benjamin F. Thomas and Joseph B.

Whitehead, who then started a national network of bottlers, creating the basic franchising

format by which the industry is still run. Candler and his successor after 1923, Robert

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Woodruff, were aggressive and innovative in marketing Coke as a leading consumer

product and cultural icon. Coupons for free samples and giveaways of items bearing the

drink's name and logo publicized the beverage, and pioneering efforts in market research

helped define how best to take advantage of advertising and promotions. During World

War II, Woodruff opened bottling operations overseas to supply U.S. military personnel,

and after the war, Coke was poised to enter these international markets, not only as a

consumer product, but also as a symbol of "the American Century."

After World War II, the soft-drink industry became a leader in television advertising, the

use of celebrity endorsements, catchy slogans, tie-ins with Hollywood movies, and other

forms of mass marketing, particularly focusing on young consumers and emphasizing

youth-oriented themes. As health and fitness consciousness and environmental awareness

became popular, the industry responded with sugar-free and low-calorie diet sodas,

beginning in the 1960s, and later, caffeine- free colas and recyclable containers.

The most famous rivalry within the industry has been between Coke and Pepsi, which

waged two rounds of "cola wars" in the twentieth century. In the 1930s and 1940s, Pepsi

challenged the industry leader by offering a twelve-ounce bottle for the same five-cent

price as Coke's standard six ounces. In the 1970s and 1980s, "Pepsi challenge" taste-tests

led Coke to change its formula in 1985, a campaign that failed because it underestimated

the attachment Coke drinkers had to the tradition and symbolism of the brand.

In 2001, the soft-drink industry included approximately five hundred U.S. bottlers with

more than 183,000 employees, and it achieved retail sales of more than $61 billion.

Americans that year consumed an average of 55 gallons of soft drinks per person, up from

48 in 1990 and 34 in 1980. The nine leading companies accounted for 96.5 percent of

industry sales, led by Coca-Cola with more than 43 percent of the soft drink market and

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Pepsi with 31 percent. Seven individual brands accounted for almost two-thirds of all

sales: Coca-Cola Classic (itself with nearly 20 percent of the market), Pepsi-Cola, Diet

Coke, Mountain Dew (a Pepsi product), Sprite (a Coca-Cola product), Dr. Pepper, and

Diet Pepsi. Domestic sales growth slowed in the late 1990s because of increased

competition from coffee drinks, iced teas, juices, sports drinks, and bottled waters. The

industry continues, however, to tap lucrative international markets; Coke and Pepsi each

have bottling operations in more than 120 countries.

Supply Chain Management

Supply Chain Management is the network consisting of Customers, Retailers,

Distributors, Manufacturer and Supplier.

It is a network of organizations that are having linkage both upstream & downstream in

different process & activities. Every interface in the supply chain represents movement of

goods, information flow, transfer of documents and purchase & sale.

Flows in Supply Chain Management

Material flows: Involve physical product flows from suppliers to customers

through the chain, as well as the reverse flows via product returns, servicing recycling &

disposal.

Information flows: Involve demand forecast, order transmission & delivery

status reports.

Financial flows: Involve credit card information, credit terms, payment schedules

& consignment & title ownership arrangements.

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Types of Supply Chain Management

Pull-based SCM: Pull-based SCM is also known as modern approach to SCM. It

is known as demand supply network. In this approach, the actual consumption pulls

distribution, which in turn pulls production, in term pulling material supply.

Push-based SCM: Push-based system is also known as traditional approach to

SCM. In this approach, materials & products are flowing from supplier to consumer, via

production & distributor unit.

Upstream & Downstream in SCM

Upstream: Order sent by customer through payment received by suppliers.

Downstream: Order received by supplier through payment sent by customer.

Components of Supply Chain Management

A Supply chain may consist of a variety of components depending on the business model

selected by a firm. A typical supply chain consists of the following components:

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• Customers

• Distributors/Retailers

• Manufacturers

• Suppliers

Distribution Channel is the chain of businesses or intermediaries through which a good

or service passes until it reaches the end consumer. A distribution channel can include

wholesalers, retailers, distributors and even the internet. Channels are broken into direct

and indirect forms, with a "direct" channel allowing the consumer to buy the good from

the manufacturer and an "indirect" channel allowing the consumer to buy the good from a

wholesaler. Direct channels are considered "shorter" than "indirect" ones.

The Distribution Channel

Distribution is also a very important component of Logistics & Supply chain

management. Distribution in supply chain management refers to the distribution of a good

from one business to another. It can be factory to supplier, supplier to retailer, or retailer

to end customer. It is defined as a chain of intermediaries; each passing the product down

the chain to the next organization, before it finally reaches the consumer or end-user. This

process is known as the 'distribution chain' or the 'channel.' Each of the elements in these

chains will have their own specific needs, which the producer must take into account,

along with those of the all-important end-user.

Channels

A number of alternate 'channels' of distribution may be available:

 Distributor, who sells to retailers,

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 Retailer (also called dealer or reseller), who sells to end customers

 Advertisement typically used for consumption goods

Distribution channels may not be restricted to physical products alice from producer to

consumer in certain sectors, since both direct and indirect channels may be used. Hotels,

for example, may sell their services (typically rooms) directly or through travel agents,

tour operators, airlines, tourist boards, centralized reservation systems, etc. process of

transfer the products or services from Producer to Customer or end user.

There have also been some innovations in the distribution of services. For example, there

has been an increase in franchising and in rental services - the latter offering anything

from televisions through tools. There has also been some evidence of service integration,

with services linking together, particularly in the travel and tourism sectors. For example,

links now exist between airlines, hotels and car rental services. In addition, there has been

a significant increase in retail outlets for the service sector. Outlets such as estate agencies

and building society offices are crowding out traditional grocers from major shopping

areas.

M arke t factors

An important market factor is "buyer behavior"; how do buyer's want to purchase the
product? Do they prefer to buy from retailers, locally, via mail order or perhaps over the
Internet? Another important factor is buyer needs for product information, installation
and servicing. Which channels are best served to provide the customer with the
information they need before buying? Does the product need specific technical assistance
either to install or service a product? Intermediaries are often best placed to provide
servicing rather than the original producer - for example in the case of motor cars.

The willingness of channel intermediaries to market product is also a factor. Retailers in

particular invest heavily in properties, shop fitting etc. They may decide not to support a
particular product if it requires too much investment (e.g. training, display equipment,
warehousing).
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Another important factor is intermediary cost. Intermediaries typically charge a"mark-
up" or "commission" for participating in the channel. This might be deemed
unacceptably high for the ultimate producer business.

Produce r factors

A key question is whether the producer have the resources to perform the functions of the

channel? For example a producer may not have the resources to recruit, train and equip a

sales team. If so, the only option may be to use agents and/or other distributors.

Another factor is the extent to which producers want to maintain control over how, to

whom and at what price a product is sold. If a manufacturer sells via a retailer, they

effective lose control over the final consumer price, since the retailer sets the price and

any relevant discounts or promotional offers. Similarly, there is no guarantee for a

producer that their product/(s) are actually been stocked by the retailer. Direct distribution

gives a producer much more control over these issues.

CUSTOMERS

The customer forms the focus of any supply chain. A customer activates the Processes in

a supply chain by placing an order with the retailer. The customer order is filled by the

retailer, either from the existing inventories, or by placing a fresh order with the

wholesaler/manufacturer. In some cases a customer by passes all these supply chain

components by getting in touch with the manufacturers directly. For example: In the case

of an online purchase of a computer from dell computers, the customers place an order

directly with the manufacturers.

RETAILERS/ DISTRIBUTORS

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The retailer acts as a link between the customers and the distributors/ manufacturers. He

caters to the needs of the customer by making the products available at his store. As part

of this process, retailer places order with the manufacturers to replenish the stock.

MANUFACTURERS

The manufacturer plays a key role in deciding the structure of a supply chain. Depending

on the market situation, the manufacturer either uses the pull or the push strategy to

generate demand required for the movement of products in the supply chain. The

manufacturer then plans for a production schedule depending on the resultant demand.

SUPPLIERS

Suppliers facilitate the manufacturers Production process by ensuring continuous supply

of raw materials. Manufacturers place orders with suppliers on the basis of forecasted

customers demand. Since it is very difficult to forecast demand accurately, manufacturers

try to integrate their processes with those of the suppliers to be in a better position to

respond to fluctuation in customer demands. Suppliers help manufacturers to decrease

their inventory levels by arranging for just–in–time supplies.

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 SALES AND DISTRIBUTION NETWORK OF PEPSICO INDIA.

COMPAN Y

FOBO
COBO

WAREHO USE

C & F Agents
DISTRIBUTERS

SALESMAN
SALESMAN

WHO LESALER

SLUMS

RETAILER

RETAILER

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Manufacturers of goods and services often struggle with finding the right mix of

identifying their particular product or service with the right customer base along with the

appropriate price and quantity to satisfy demand. Supply chain management provides

valuable insight and assistance by providing organization’s information identifying core

competencies and competitive advantages. When used to develop a strategic plan supply

chain management can identify areas of improvement resulting in improved processes

and increased profitability through cost reductions and improved customer

responsiveness.

Coca Cola began as a small organization with a limited supply chain in a small local

market. However, as Coca Cola grew and expanded, its supply chain grew with it. This

paper discusses Coca Cola’s supply chain changes throughout its life cycle from

traditional mass merchandising, inventory management and cost containment, supplier

and customer alliances, relationship formation, and the future capabilities of its supply

chain.

Supply Chain D e finition

Supply chain management encompasses the preemptive managing of the progression of

goods, services, data, and money between the raw materials stage to the end user, the

customer (Trent, 2004, p. 55, para. 5). Successful organizations resorted to thinking

outside the box by looking at the entire business strategic picture. Realizing that decisions

made by one party in the supply chain directly affected others in the supply chain,

organizations began developing strategies to best use the resources at hand. As a result,

supply chain management seeks solutions or methods benefiting the entire supply chain.

As Trent (2004) comments “Supply chain management involves proactively managing

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the two- way movement and coordination (that is, the flows) of goods, services,

infor mat io n, and funds from raw materia l through end user” (p. 54, para. 3).

Traditional M as s M e rchandis ing

Organizations like Coca Cola started out as local or regional manufacturers that

eventually employed large scale manufacturing techniques. However, these traditional

mass manufacturing techniques prevented quick product design, research and

development. During this timeframe, Coca Cola focused on producing Coke by keeping

equipment operating and maintaining a steady stream of supplies that resulted in excess

work- in- process inventory (Wisner, Leong, & Tan, 2005, p. 10, para. 4). In this scenario,

because information, design, production, and distribution are conducted in house, outside

collaboratio n is not a viable option..

Inve ntory M anage me nt and Cos t Containme nt

As Coca Cola expanded nationally and internationally by adding licensed bottlers and

distributors, the company recognized the need to control inventory and its related cost to

the company. The advent of material requirements planning (MRP) systems and

manufacturing resource planning (MRPII) systems along with improved computer

capabilities provided organizations like Coca Cola the ability to track inventory

accurately. As a result, reduction of inventories such as new and used bottles, sugar,

syrup, and other ingredients occurs along with improvements in communication

indicating when further acquisitions are necessary. While not implemented, Coca Cola

realizes the importance of radio frequency identifica t io n as a benefit for the future.

Supplier and Customer Allia nces

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Coca Cola along with many other companies found itself in fierce global competition.

Coke found itself competing globally with other soft drink manufacturers, most notably

Pepsi Cola. Manufacturers investigated ways to provide low cost and high quality

products while maintaining high customer service levels. To accomplish these goals,

Coca Cola implemented “just- in- time (JIT) and total quality management (TQM)

strategies to improve quality, manufacturing efficiency, and delivery times” (Wisner,

Leong, & Tan, 2005, p. 11, para. 1). To minimize disruptions to manufacturing because

of schedule or production problems related to safety stock, organizations began to see the

value in strategic and cooperative supplier- buyer customer relations through the use of

JIT and TQM.

Developing strategic cooperative supplier- buyer customer relationships allows

organizations such as Coca Cola to select suppliers that provide the highest quality

service. Coca Cola identifies those suppliers and gives the majority of its business to

those that assist in generating additional sales through improved delivery, quality, and

product design as well as provide cost savings, improvements in processes, materials, and

components used in the manufact ur ing of their products.

Organizations, facing increased competition and uncertain economic conditions, use

business process reengineering (BPR) that is a business process designed to reduce waste

and increase performance. To accomplish this, organizations focus on cost reductions and

emphasis placed on organizational core competencies leading to long- term competitive

advantage. For example, Coca Cola has installed SAP software to assist improving

processes, executio n, and store deliver ies.

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 COMPANY PROFILE

COCA COLA

If we Indians recall our memory there was a time when one was asked for a soft

drink, the brand that comes and gave a knock on our mind was Coca- Cola. Coca- Cola, the

word most admired trademark has maintained its special a sense of belongingness to

India, which had resulted some sort of its monopoly throughout the Indian soft drink

market. It has been said that the internal environment of the industry has been greatly

effected from its internal environment. The same thing was also happen with this famous

company. When the Government policy were in introduce and forced this MNC's to go

outside from the India market. Hence, it was thrown out of India in the year 1977. A

lacuna was created at that time in the country's soft drinks market. How ever after a gap

of 17 years, the Coca- cola has reappeared in the soft drinks market of India, by making

itself more strong and confident in this field.

In today's market, the cola's (Coke, Thumsup, Pepsi, etc.) had a 70% share,

Lemon 10% and Orange 20%. There appears to be a concentrated rush to bag a share in

the soft drinks market. Due to a manifold increase in the demand of soft drinks large

number of company has entered into this competit ive market scenario.

In India two major companies engaged in soft drinks market are Pepsi and Coca-

Cola. While RC cola is still a novice in the Indian Market, although it being the world

oldest soft drinks manufac t ure r.

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 Pepsi- Cola attacked Coca- cola before World War- II. Coca- Cola dominated the

Americans soft drinks industry. Pepsi- Cola was a drink costing less to manufacturers and

with a less satisfactory taste than coke.

During the Second World War Pepsi and Coke, both of them enjoyed a huge sale.

After the war the Pepsi sales started to fall relatively to Coke. The factors which were

responsible for the decline in Pepsi sales were poor image, poor task force, poor quality

control and dull packaging.

It was a momentous day when Coca- Cola staged its reliance in India. Coca- Cola

was relaunched again in India in Sep. 1993 at Hathras near Ghaziabad, where the first

bottling facility of Coca- Cola in India was switched on. The Indian people welcomed the

come back of their most loved cola in the country with great enthusiasm and vigor. Coca-

Cola market its relaunching acquiring 5 Parle Exports Ltd. Top Selling products Viz-

Thums up, Sprite, Limca, Fanta, Mazza, K. Soda,Kwater,Coke.

In 2000, the company opened a new bottling plant at Dasna in Ghaziabad distt.

For the supply of 300 ml Bottle and 1.5 liter Bottles. This plant is more settled equipped

than the plant at Najibabad.

THE CO CA- CO LA COMPANY ANNO UNCES FIRST QUARTER 2004 RESULTS

Chairman and CEO Doug Daft: "Throughout the quarter, we achieved share gains

as our system successfully responded to and managed worldwide challenges and

opportunit ies with flexib i lit y, speed and professiona lis m".

Worldwide unit case volume grew 4 percent in the first quarter.

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 Reported earnings per share were $ 0.34 for the quarter, which included a net

negative $ 0.03 per share impact from a charge related to streamlining initiatives and a

gain from a litigat io n settlement.

The Company expects strong cash flows to continue in the future. Cash from

operations for he quarter was $ 599 million, including the impact of a $ 145 million

contribut io n to the Company's U.S. pension plan.

The Company repurchased 8.3 million shares of its common stock for $ 319

million during the first quarter and intends to repurchase approximately $ 1.5 billion of its

stock in 2004. Dividend increased 10 percent in 2004, reflecting the 41st consecutive

annual increase.

Atlanta, April 16, 2004 - The Coca- Cola Company reported first quarter earnings per

share of $ 0.34, compared to a net loss share of % 0.08 for the year - ago quarter. First

quarter reported results included a net reduction of $ 0.03 per share related to the

previously announced streamlining initiatives and a gain related to a litigation settlement.

The prior year loss resulted from the adoption of SFAS No. 142 - "Goodwill and O ther

Intangible Assets, "and other charges/ gains. Worldwide unit case volume increased 4

percent in the first quarter, reflecting 3 percent volume growth in North America and 4

percent internat io na lly.

The beverage industry has not been immune to the week global macroeconomic

environme nt that has impacted many business sectors.

In addition to these factors, the beverage industry, including the Company, was adversely

affected by short- term external factors, including a slowdown in "away from home"

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consumption caused by the war in Iraq, a lengthy national strike in Venezuela, a change

in deposit laws in Germany, and a shift in the timing of the Easter holiday.

Doug Daft, chairman and chief executive officer, said, "The results of the Coca- Cola

Company are always driven by the operational, financial and brand strengths of our entire

system in our markets. Given the current volatile worldwide environment, our

management team has continued to carefully monitor worldwide events and respond

rapidly and effectively. We have enhanced productivity and cost efficiencies. We are also

targeting our resources to the markets of greatest opportunity and stability, while taking

all necessary steps to protect our business in more challengi ng markets.

"Throughout the quarter, we achieved share gains as our system successfully responded to

and managed worldwide challenges and opportunities with flexibility, speed and

professionalism. Looking ahead, we are confident our results will improve during the

year as we move beyond the short- term external factors that impacted this quarter".

Financial Highlights

First quarter 2004 reported results were $ 0.34 per share, which included a net

reduction of $ 0.03 per share related to the previously announced streamlining initiatives

and a gain related to a litigation settlement. Prior year first quarter results reflected a net

loss of $ 0.08 per share, which included the net reduction of & 0.42 per share reflecting

the adoption of SFAS No. 142 - "Goodwill and other Intangible assets, " and other

charges/ gins. The individual impact of these items on earnings per share is summarized

as follows :

First

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 Cash from operations for the quarter was $ 599 million, including the impact of a

$ 145 million contribution to the Company's U.S. pension plan. The Company expects

strong cash flows to continue in the future.

The Company repurchased 8.3 million shares of its common stock for $ 319

million during the first quarter and intends to repurchase approximately $ 1.5 billion of its

stock in 2004.

The company increased its dividend 10 percent in 2004, reflecting the 41st

consecutive annual increase.

OPERATIONAL HIGHLIGHS

North America

Unit case growth was 3 percent for the first quarter, driven by solid performance

in the Retail Divis io n, offset by a decline in the Foodservice and Hospitalit y Divis io n.

The overall industry growth was negatively impacted by the timing of the Easter

holiday, poor weather conditions, and weaker traffic in restaurants, hotels and leisure

channels. Despite these factors, the Coca- Cola system remained focused on local

execution, resulting in growth that outpaced the total nonalcoholic ready- to- drink

industry, includ i ng share position improve me nts in the major beverage categories.

Results during the quarter were fueled by over 2 percent growth in Trademark

Coca- Cola in the Retail Division, driven by innovation and strong performance from

Vanilla Coke, diet Vanilla Coke, diet Coke and the continued expansion of the Fridge

Pack.

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 N oncarbonated beverages continued strong growth led by 22 percent growth in

Dasani, 16 percent growth in Powerade and continued strong double- digit growth from

Minute Maid Lemonades. Unit case volume also benefited from last year's strategic

transactions involvi ng Evain and the Danone water brands.

ASIA

Unit case volume increased 8 percent for the quarter, cycling 9 percent growth in

the prior year first quarter.

Strong performance was driven by double- digit growth in China, the Philippines,

India and Thailand. Trademark Coca- Cola and Fanta continued to drive the growth in

many key markets, along with strong performance of local brands such as Thums Up,

Qoo an Kinley.

In China, 21 percent growth in unit case volume was led by double - digit growth

in Trademark Coca- Cola, Fanta and Sprite driven by highly successful Chinese N ew Year

activities and several packaging initiatives. In addition, non- carbonated beverages to

develop with the introduct io n of Nestea and the continued expansion of Q oo.

In Japan, unit case volume declined 2 percent in the quarter, cycling 6 percent

growth in the prior year first quarter. Solid growth in both January and February was

offset by a sharp decline in industry trends during March. Despite the challenging

economic environment, the Company continued to increase share during the quarter in the

highly profitable tea, coffee and carbonated soft drink categories.

Further, in Japan, the Company continues to drive industry leading performance through

initiatives surrounding its core brands and margin enhancement opportunities through

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package innovation and a strong focus on accelerating growth in the profitable

convenience store and vending channels. In addition, during March, the Company and

several of its bottling partners announced plans to create a national supply chain

management company to reduce costs through efficiency in procurement, production and

logistics, and develop a flexible supply system that will respond to changes in consumer

and customer needs, as well as improve customer service.

A 100 YEARS OF THE CURVY GLASS BOTTLE OF CO CA- COLA

Coca- Cola Company marks a mile stone on Wednesday, 24th March 1899 Chattanooga;

Tenn where its first bottling plant was started 100 year ago by two men struck one of the

most lucrative business deals in US history. Joseph Whitehead and Benjamin Thomas

offered Coca- Cola Company owner Asia Candler a dollar for the right to bottle soft

drinks in 1899. Today I billion soft drinks are sold each day in more than 200 countries

around the world.

Candler had purchase what would become the Cola Company for $2,300 eight years

earlier from John Pemberton, an Atlanta Phamacist who astonished the world. Candler

thought the bottling Venture would never succeed, but he signed the contract with White

Head And Thomas and way, "and the rest is history", Bob Lovell, vice president of

marketing for Coca- Cola bottling company, United Inc., said in telephone interview from

Chattanooga.

Lovell said Thomas had seen Cuban Fields hand drinking Pina Fria a Pineapple

beverages, from bottles while he was stationed in Cuba during Spanish American War.

When he returned to Chattanooga, he decided to pitch the idea of bottle soft drinks to

coke, which was then sold only as a founta in beverage.

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"It occurred to him that Coca- Cola in bottles would be very popular", Lovell said, "Mr.

Candler did not see any future in it because the containers were not sound, but that's how

it all came about. "Thomas and Whitehead promised to pay one dollar for the right to

bottle Coca- Cola, but legend has it that no money changed hands.

THE IMAGE

The image is communicated all around the world in advertisement on media such as

newspaper, magazines, radio and televis io ns. The list goes on....

However, image is much than just advertising every person working within the coca- cola

system is part of the image whether one is involved in creating its advertising, making it's

quality products, or selling, merchandizing and distributing its beverage their hard work

and attitude will say something to the people about its product.

Coca- Cola was formulated in 1886 by Dr. John Pemberton, a Pharmacist in Atlanta,

Georgia. The drink was sold ad refreshing elixir at the fountain counter of Jacob's

Pharmacy of which Dr. John Pemberton was part owner, unaware that the pharmacist had

given birth to a caramel colored syrup which is now the chief ingredient of the worlds

favorite drink. Today the white- on- red flow of Coca- Cola is familiar sight in more then

195 countries. The syrup combines with the carbonate water to fuel a $ 16.2 billion

corporation that has captured a 46% Slice of the global soft drinks market. The company

estimates that the drink is served more than 773 million times every day and if all Coke

ever produced were filed in standard bottles and placed end to end it would wrap around

the equator 21, 161 times.

25
The story of Coca- Cola is a story of a drink and its charm with the consumer. The of

ecstasy and again that the drink has caused to those dedicated to its growth Pemberton

first managed to sell and average of 9 drinks per day, though a shop called Jacob's

pharmacy, in 1891, Candler bought Coca- cola company with four companies he formed

the coca- cola company with the initial stock of $100,000. Coca- Cola was registered at the

US patent office in 1893, and began selling at soda fountains for 5 cents a glass of

therapeutic refreshment 1894, I got into bottles, courtesy a candy merchant Joseph

Boedenharn of Mississipp i.

Five years later; the drink was being bottled on a regular basis under a region wise

franchising system; and its first competitor Pepsi cola, Coca- Cola's first bottling plant

opened in Chatanooga, Tennessee followed by another in Atlanta in 1900. The unique

taste of cola was an outstanding success. O ver the next two decade the number of plants

crossed 1000. In a bit to difference the prodect, the company adopted 6.5 ounce, pale

green countor bottle designed by the root glass company of Terri Haute, Indiana. Today it

is an intrins ic part of the brand.

The company broadened its horizons when Robert Woodruff the son of a banker who

acquired to Company for $25 million in 1919, assumed charge in 1923. He began by

ungrading bottling operations, brought in innovations like a six- bottle carry home carton,

and gear up advertising support. It was under Wood Ruff that the brand. K nown

affectionately as coke by now associated it self with sportive events. By the early 1940's

the brand was selling as the "real thing" to set it self apart from "me to" cola's.

As a time went by the company brought out some new aerated drinks. The first one

"Fanta" appeared in the selves in 1960.

26
Its birth was an accident, the company's German name is an attempt to produce Coca-

Cola without some key ingredients, turned out into an orange flavored drink instead. its

strategists who feared the dependence on just one put a cap on growth welcomed it. While

Fanta was being rolled out the company bought minute made cosrp. Which in 1967 was

combined with Duncan foods to pave way for the Coca- Cola foods. Several beverages

followed the most notable being 'sprite', a lemon drink developed in the late 1950 and

formally launched in 1961.

Coca- Cola had diversified the company into businesses and it even had a steam generator

and boi8ler making division. Robert C Goizueta, Cuban born 27 years veteran took over

as the Coca- Cola unlike Pepsi company depended on a single brand. The best insurance

policy that he figured was to let coke evolve to the summer slacking it with variants, even

reinventing if needed. In 1982, the company launched what is now considered among the

world's most successful brand extensions 'Diet Coke', under the leadership of Sergio

Zyman, the head of us marketing. The idea was to retain the loyalty for the health

conscious drinker who loved the taste but hated the calories. After this it came out with

cafeeine free versions of its main drinks. yet in the US the company kept losing ground to

Pepsi. zyman, a former Pepsi marketer argued that the correct strategy was to replace 98

year old with better tasting cola, label it as "New Coke" and blare the news which is

exactly what the company did more a decode age in 1985. But when placed on the

shelves it did not budge. On wide spread protest it was recalled after 79 days.

The company has about 100 brands in its portfolio but coke, Fanta and sprite account for

most of its sales. In 1994, the real thing's coke sold over 52.5 billion liters. For the taste of

it diet coke along with Coca- Cola light sold 8.5 billion liters, which makes it the world's

27
two top non cola drinks sold over 6.5 billion liters each. Which sprite aimed at the

independent youngster two does not care what as others drink (the as line "obey you're a

thrust"). In 1993, Coca- Cola reentered India after a 16 years ling exile, four years Pepsi

made its debut India. While Coke plays on brand nostalgia. Pepsi address the young

crowd, which unlike a in America is a dominate ort if the populatio n here.

The Coc a - Cola Company

The Coca - Cola Company is the world's largest beverage company. Along with Coca -

Cola, recognized as the world's best - known brand, The Coca - Cola Company markets

four of the world's top five soft drink brands, including diet Coke, Fanta and Sprite, and a

wide range of other beverages, including diet and light soft drinks, waters, juices and

juice drinks, teas, coffees and sports drinks. Though the world's largest distribution

system, consumers in more than 200 countries enjoy The Coca - Cola Company's

products at a rate exceeding 1 billion servings each day. For more information about the

Coca - Cola Company, please visit our website at http: // www. coca- cola.com/.

Forward - Looking Statements

This press release may contain statements, estimates or projections that constitute

"forward - looking statements" as defined under U.S. federal securities laws. Generally,

the words "believe," "expect," "intend," "estimate," "anticipate," "Project," "will" and

similar expressions identify forward - looking statements, which generally are not

historical in nature. Forward - looking statements are subject to certain risks and

uncertainties that could cause actual results to differ materially from The Coca - Cola

Company's historical experience and our present expectations or projections. These risks

include, but are not limited to, changes in economic and political conditions, changes in

the non - alcoholic beverages business environment, including actions of competitors and
28
changes in consumer preferences; product boycotts; foreign currency and interest rate

fluctuations; adverse weather conditions; the effectiveness of our advertising and

marketing programs; fluctuations in the cost and availability of raw materials; our ability

to achieve earnings forecasts; regulatory and legal changes; our ability to penetrate

developing and emerging markets; litigation uncertainties; and other risks discussed in

our Company's filings with the Securities and Exchange Commission (the "SEC"),

including our Annual Report on Form 10- K, which filings are available from the SEC.

You should not place undue reliance on forward - looking statements, which speak only

as of the date they are made. The Coca Cola Company undertakes on obligation to

publicly update or revise any forward - looking statements.

29
P RODUCT P ROF ILE OF Coc a-Cola

The product range of the coke has listed brands:

Coke : 200ml, 300ml, 330ml, 500ml, 1lt, 1.5lt, 2lt

Thumps UP: 200ml, 300ml, 330ml, 500ml, 1lt, 1.5lt, 2lt.

Limca: 200ml, 300ml, 330ml, 500ml, 1lt, 1.5lt, 2lt.

Fanta: 200ml, 300ml, 330ml, 500ml, 1lt, 1.5lt, 2lt.

Sprite: 300ml, 330ml, 500ml, 1lt, 1.5lt, 2lt.

Mazza: 250 ml, Tetra Pack

Diet Coke: 330ml, 1.5 lt, 2lt.

Kn. Soda: 300ml, 500ml,

Kn. Water: 500ml, 1lt, 2lt,

FENTA APPLE

Beverages company Coca- Cola today introduced an apple flavoured variant for its

sparkling drink brand Fanta.

The drink, Fanta Apple , sporting a communication tagline of ‘Go Bite’ has been

developed especially for Indian consumers. The company has roped in actress Genelia

D’Souza as the brand ambassador for the brand.

Fanta Apple will be launched in a phased manner starting with the southern states of

Andhra Pradesh and Tamil Nadu followed by a national roll- out over the next two

months.

30
“Fanta Apple would be retailed across 35,000 outlets in the two states in the launch

phase,” Deepak Kaul, Region Vice President South, Hindustan Coca- Cola Beverages Pvt.

Ltd said.

The new variant will be available in 200 ml and 300 ml returnable glass bottles (RGB)

priced at Rs 8 and Rs 10 respectively.

In addition, it would also be available in a mobile 500 ml PET pack priced at Rs 22.

Brand Fanta, already present in over 190 countries, was first launched in India in 1994.

The 360 degree marketing communication plan for the brand will involve road shows

includ ing extensive experient ia l sampling sessions in markets, offices, malls and colleges.

Further, a TV commercial featuring Genelia and the ‘Go Bite’ proposition of the Fanta

Apple brand will be aired starting first week of November, 2008 on all the leading

channels in the south. The entire brand campaign has been developed and executed by

Ogilvy & Mather, Delhi.

FUNCTION OF PLANT

First Process

Water Treatment

THE FUTURE O F COCA- COLA

While dong business overseas offers Coke wonderful growth opportunities it also has its

own disadvantages. The economic slowdown in various overseas markets and the strong

dollar had their impact on Coca- Cola revenues and bottom line in 1999. But the company

optimist ic about the future.

31
Mc- Douglas Investor, The Chief Executive Officer of the Coca- Cola Company says,

"This past year 1999 has been a challenging period for the Coca- Cola Company as

economic environment became more uncertain in the later part of 1999, we strongly

believe that our fundame nta l opportunit ies for long term growth have not changed".

As long as maximization of share holder wealth remain coke's focus for its future4 is

assured Goizueta had stated and proven to the world that focus on shareholder wealth

does more good to the company than focus on revenues and it is not hat coke does not

enjoy volumes for it is world's No. 1 soft drink manufacture. It is not content with this

title and is aiming at higher volumes year after year. Surely coke will continue to grow.

Point on Roberto had reduced the company basically to its trademark and the returns are

so astronomical as to be off the boards. It just absolutely added a jet engine to their

performance.

CO CA- CO LA ANCHOR BOTTLERS

One of the driving forces behind coke's bottling system are that is anchored by 10

strategica lly signed business partners of the Coca- Cola Company, the anchor bottlers.

Anchor bottlers are a group of select companies throughout the Coca- Cola system that are

distinguis hed by-

A pursuit of the same strategies aims as the Coca- Cola Company in the

development of the non- alcoholic beverage business.

32
 A commit me nt to long term growth.

Equity position by the Coca- Cola system.

Service to a large, geographica ll y divers area.

Suffic ie nt financ ia l resources to make long - term invest me nts.

Management expertise and depth.

CO KE'S BOTTLING STRATEGI ES

In the soft drink business the bottlers are responsible significant extent for ensuring the

availability of the products. Bottlers are supplied with concentrate to which they add

aerated water and bother ingredients before packing and sealing either cans or bottles.

Bottlers play a strategic role in the success of soft drinks companies and this was not far

from Goiueta's mind.

In 1986 the company merged some of its company owned bottling operations with two

large ownership groups that had been put up for sale. All these bottling activities were

combined to from its own subsidiary Coca- Cola Enterprises (CCE) to handle bottling

operations. The Coca- Cola Company took 49 percent equity stake in Coca- Cola

Enterprises enabling it to retain its own balance sheet.

MARKET PLACE

More than a billion times everyday, thirsty people around the world reach for Coca- Cola

products for refreshment. They deserve the highest quality- every time. Our promise to

deliver that quality is the most important promise we make. And it involves a worldwide,

yet distinctively local, network of bottling partners, suppliers, distributors and retailers

whose success is paramount to our own. Our investment in local communities in over 200

33
countries totals billions of dollars in jobs, facilities, marketing, the purchase of local

goods and services, ands local business partnerships, always and everywhere, we pursue

continuous innovation in the products we offer, the processes we use to make them, the

packages we develop and the ways we bring them to market.

34
 Pe ps iCo is a world le ade r in conve nie nt foods and be ve rage s , with 2006 re ve nue s of
more than $35 billion and 168,000 e mploye e s .

This philosophy is expressed in our sustainability vision which states: “PepsiCo’s

responsibility is to continually improve all aspects of the world in which we operate –
environment, social, economic - - creating a better tomorrow than today.” The company
consists of Frito- Lay North America, PepsiCo Beverages N orth America, PepsiCo
International and Quaker Foods North America. PepsiCo brands are available in nearly
200 countries and territories and generate sales at the retail level of about $92 billio n.

Some of PepsiCo's brand names are more than 100- years- old, but the corporation is
relative ly young..

PepsiCo was founded in 1965 through the merger of Pepsi- Cola and Frito- Lay. Tropicana
was acquired in 1998 and PepsiCo merged with the Q uaker Oats Company, including
Gatorade, in 2001.

Divis ions

 PepsiCo Americas Beverages (PAB)

 Frito- Lay North America (FLNA)

 Quaker Foods N orth America (Q FNA)

 Latin America Foods (LAF)

 Europe

 Asia, Middle East & Africa

35
 COMP ANY’S OP ERATIONS

We are organized into three business units, as follows :

(1) PepsiCo Americas Foods (PAF), which includes Frito- Lay North America (FLNA),
Quaker Foods North America (QFNA) and all of our Latin American food and snack
businesses (LAF), includ ing our Sabritas and Gamesa businesses in Mexico.

(2) PepsiCo Americas Beverages (PAB), which includes PepsiCo Beverages N orth
America and our entire Latin American beverage Businesses.

(3) PepsiCo International (PI), which includes all PepsiCo businesses In the United
Kingdom, Europe, Asia, Middle East and Africa.

36
Share holde rs

PepsiCo (symbol: PEP) shares are traded principally on the New York Stock Exchange in
the United States. The company is also listed on the Amsterdam, Chicago and Swiss stock
exchanges. PepsiCo has consistently paid cash dividends since the corporation was
founded.

Corporate Citize nship

At PepsiCo, we believe that as a corporate citizen, we have a responsibility to contribute

to the quality of life in our comm.

Our vision is put into action through programs and a focus on environmental stewardship,
activities to benefit society, and a commitment to build shareholder value by making
PepsiCo a truly sustainable company.

P e psiCo He adquarte rs

PepsiCo World Headquarters is located in Purchase, N ew York, approximately 45

minutes from New York City. The seven- building headquarters complex was designed by
Edward Durrell Stone, one of America's foremost architects. The building occupies 10
acres of a 144- acre complex that includ es the Donald M.

Kendall Sculpture Gardens, a world- acclaimed sculpture collectio n in a garden setting.

The collection of works is focused on major twentieth century art, and features works by
masters such as Auguste Rodin, Henri Laurens, Henry Moore, Alexander Calder, Alberto
Giacometti, ArnaldoPomodoro and ClaesOldenberg. The gardens originally were
designed by the world famous garden planner, Russell Page, and have been extended by
François Goffinet. The grounds are open to the public, and a visitor's booth is in operation
during the spring and summer.

37
 Our Mission, Vision and Guiding Principles

Mission

We aspire to make PepsiCo the world’s premier consumer Products Company, focused on
convenient foods and beverages. We seek to produce healthy financial rewards to
investors as we provide opportunities for growth and enrichment to our employees, our
business partners and the communities in which we operate. And in everything we do, we
strive to act with honesty, openness, fairness and integrity.
The behaviors that will help us achieve our mission are articulated in our Values
Statement.

Our Sustainability Vision

38
PepsiC o’s responsibility i s to continually improve all aspects of the world in which
we operate—environment, social, economic – creating a better tomorrow than
today.
We believe Sustainability lives at the intersection of public and corporate interest. It
encompasses citizenship and corporate social responsibility, which are about doing the
right things for society and for the business. It encompasses the health of the Company,
which is about fulfilling our mission of creating financial rewards and growth. We have
articulated what we stand for and the core values we are committed to support.

Values

Our commitment is to deliver sustained growth, through empowered people, acting with
responsibility and building trust.

Here’s what this means:

Sustained Growth is fundamental to motivating and measuring our success. Our quest
for sustained growth stimulates innovation, places a value on results, and helps us
understand whether actions today will contribute to our future. It is about growth of
people and company performance. It prioritizes making a difference and getting things
done.

39
Empowered People means we have the freedom to act and think in ways that we feel
will get the job done, while being consistent with the processes that ensure proper
governance and being mindful of the rest of the company’s needs.

Responsibility and Trust form the foundation for healthy growth. It’s about earning the
confidence that other people place in us as individuals and as a company. Our
responsibility means we take personal and corporate ownership for all we do, to be good
stewards of the resources entrusted to us. We build trust between ourselves and others by
walking the talk and being committed to succeeding together.

Guiding Principles:

This is how we carry out our commitment.

We must always strive to:

 Care for customers, consumers and the world we live in- We are driven by an
intense, competitive spirit in the marketplace, but we direct this spirit toward
solutions that achieve a win for each of our constituents as well as a win for us.
Our success depends on a thorough understanding of our customers, consumers
and communities. Caring means going the extra mile. Essentially, this is a spirit of
growing rather than taking.

 Sell only products we can be proud of- The test of our standards is that we must
be able to personally endorse our products without reservation and consume them
ourselves. This principle extends to every part of the business, from the
purchasing of ingredients to the point where our products reach the consumer’s
hands.

40
 Speak with truth and candor- We speak up, telling the whole picture, not just
what is convenient to achieving individual goals. In addition to being clear, honest
and accurate, we take responsibility to ensure our communications are understood.

 Balance short term and long term- We make decisions that hold both short-term
and long-term risks and benefits in balance over time. Without this balance, we
cannot achieve the goal of sustainable growth.

 Win with diversity and inclusion-We leverage a work environment that embraces
people with diverse traits and different ways of thinking. This leads to innovation,
the ability to identify new market opportunities, all of which help develop new
products and drives our ability to sustain our commitments to growth through
empowered people.

 Respect others and succeed together- This company is built on individual

excellence and personal accountability, but no one can achieve our goals by acting
alone. We need great people who also have the capability of working together,
whether in structured teams or informal collaboration. Mutual success is
absolutely dependent on treating everyone who touches the business with respect,
inside and outside the company. A spirit of fun, our respect for others and the
value we put on teamwork make us a company people enjoy being a part of, and
this enables us to deliver world-class performance.

41
 CREATING A BETTER TOMORROW THAN TODAY

” The company consists of Frito-Lay North America, PepsiCo Beverages North America,
PepsiCo International and Quaker Foods North America.

42
 B EVERAGES

PepsiCo's beverage business was founded in 1898 by a pharmacist named Caleb

Bradham who created a special beverage, a soft drink, in the back room of his drug store

in New Bern, North Carolina. This new soft drink called "Brad's Drink" had a unique

mixture of kola nut extract, vanilla and rare oils. Caleb began to advertise his new

creation with the theme "Exhilarating, Invigorating, Aids Digestion" and renamed it as

"Pepsi-Cola.” Caleb Bradham began his cola operation in 1902. The Pepsi Cola Company

was headquartered in the back room of his drug store where he packaged the syrup for

sale to other soda fountains. The business increased, and on June 16, 1903, "Pepsi-Cola"

was officially registered with the US Patent Office. And as a result, Caleb Bradham began

to franchise Pepsi-Cola to many independent investors. By the end of 1910, Pepsi-Cola

was franchised in 24 states.

43
Today, Pepsi- Cola Company is a major division of PepsiCo's corporate structure. Pepsi-

Cola Company now produces and markets a wide range of beverages to retail, restaurants

and food services in more than 191 countries and territories around the world and brings

in a annual revenue of $10 billio n.

There are 200 plants in the US and Canada, as well as, 530 plants throughout the rest of

the world, that produces Pepsi- Cola's beverages. Since the creation of Pepsi- Cola in 1898,

Pepsi- Cola Company has introduced 13 beverages that wear the Pepsi- Cola trademark.

Five of Pepsi- Cola's brand names: Pepsi, Diet Pepsi, Mountain Dew, 7 UP, and Mirinda,

each brings in an annual revenue in consumer sales of $1 billion. In 1992, a partnership

between Thomas J. Lipton and Pepsi was formed.

This partnership produces, markets, and distributes Lipton Brew, Lipton Brisk and

Lipton Fountain Ice- Tea. And in 1993, Pepsi Max a low calorie cola was created and

introduced only for the international markets. Pepsi Max is now produced in over 40

countries and is the third largest- selling cola brand outside the US. PepsiCo is continuing

to expand and introduce new alternative beverages in the market. There are four

alternative beverages that are currently being tested in our market today. Mazagran, a

cold sparkling coffee based beverage, Aquafina, bottled water, and a low fat milk shake

called Smooth Moos.

44
 SNACK F OODS

PepsiCo's food business started in 1932 at the birth of both, the Frito- Lay Company, a

producer of corn- chips and H.W. Lay Company, a producer of potato chips. In 1961, the

Frito- Lay company merged with the H.W. Lay Company to form Frito- Lay, Inc. (20)

Today, Frito- Lay Inc., is a major division in PepsiCo's corporate structure. The Frito- Lay

Inc., is the world’s number one snack food company in the US and in most of its 39

international markets. Frito- Lay manufactures, distributes and markets snacks all over the

world. In 1995, Frito- Lay Company marketed more than 150 varieties of snack food

products worldwide and representing over half of the sales of snack chips in the United

States.

Some of their products include: Lay's and Ruffles brand potato chips, Doritos and
Tostitos brand tortilla chips, Frito's brand corn chips, Cheetos brand cheese flavored
snacks, Rold Gold brand pretzels, and a variety of dips and salsas. Since 1990, in the
United States alone, volume has grown 9 percent annually. In 1966, PepsiCo launched its

45
international snack foods operations. Currently, Frito- Lay's snack products are available
in 81 countries and territories outside North America.

46
PEPSICO
IN
INDIA

47
OUR CORP ORATE P ROF ILE

In everythi ng w e do, w e stri ve for honesty, fai rness and i ntegri ty:
PepsiCo India is striding ahead rapidly towards enabling the global vision to be the
world's premier consumer products company focused on convenience foods and
beverages. PepsiCo India seeks to produce healthy financial rewards for investors as it
provide opportunities of growth and enrichment to its employees, business partners and
the communit ies in which it operates.

Establ i shment
PepsiCo established it's business operations in India in 1989 and has grown to become
one of the country’s leading food and beverage companies. One of the largest
multinational investors in the country, PepsiCo has established a business which aims to
serve the long term dynamic needs of consumers in India.

Investment

PepsiCo India and its partners have invested more than USD1 billion since the company
was established in the country.

48
Empl oyment

PepsiCo India provides direct and indirect employment to 150,000 people including
suppliers and distributo rs.

CORP ORATE SOCIAL RESP ONSIB ILITY – INDIA

Performance With Purpose articulates PepsiCo India’s belief that its businesses are
intrins ic a lly connected to the communit y and world that surrounds it.

Replenis hing Water

In 2009, through our various initiatives of replenishing water we were able to give back to
the communit y more than consumed in our manufact ur ing processes.

Was te to We alth

49
PepsiCo India’s unique Waste to Wealth initiatives to convert bio- degradable waste into
high qualit y organic manure and recyclable waste is recycled.

Partne rs hip With Farme rs

PepsiCo India continues to strengthen it’s partnerships with Farmers across the country to
boost their productivit y and income.

Human Sustainabilit y
This reflects PepsiCo’s goal of nourishing consumers with products that range from treats
to healthy eats. PepsiCo’s products have always offered consumers nutrition as well as
great taste. The progress that PepsiCo has made under the Human Sustainability pillar
includes reformulating some of its products to improve their nutritional profile while
launching products that reflect consumer demand for healthier nutritious snacks and
beverages. PepsiCo partners with Governments, health officials and N on
GovernmentalOrganisations to help address obesity concerns and it continues to provide
consumers with new product choices and innovat io n.

Environme nta l Sustainabilit y

This is based on PepsiCo’s commitment to strive to replenish the resources used where
possible, and minimize the impact on the environment. PepsiCo continues to work to
further reduce its water and electricity consumption and improve its packaging
sustainability. Across the world, PepsiCo has re- used water from its processing plants and
has worked with local communities to provide access to clean water, while supporting
farmers to deliver “More crop per drop.

50
Tale nt Sustainability
This is founded on PepsiCo’s belief that cherishing its extraordinary group of people is
crucial to building an empowered workforce. PepsiCo pursues diversity and creates an
inclusive environment which encourages associates to bring their whole selves to work.
PepsiCo has increased female and minority representation in the management ranks and
has encouraged employees to participate in community service activities while continuing
to create rewarding job opportunit ies for people with differe nt abilit ies.

51
 1. REVIEW OF LITERATURE

Pepsico is one of the oldest, largest and most successful beverage and snack food

companies in the world. Pepsico was founded by Caleb Bradham in 1902 in USA. Today

pepsico and its affiliates operate in more than 140 countries in the world and generate

revenues in excess of $ 40 Billion. In its pursuit of never ending growth and expansion,

pepsico entered India in 1989 in a joint venture with Punjab Government. However,

pepsico India very soon started its beverage operations in collaboration with the R K

Jaipuria group.

Soon after entering the beverage segment pepsico Established its dominance in the market

owing to its expertise in sales, marketing, operations and local collaboration. Pepsico

maintained its market dominance for many more years to come. However, this advantage

slipped and pepsico had to concede the market leadership to Coca Cola India. Several

actors were responsible for this development. But, the most important are; Distribution

channel is having an important role in positioning of the product because we know that

distribution channel is tool by which we can make reach our product to the final

consumers Discontinuation of slums in the distribution network by pepsico. This move by

pepsico adversely affected its position of a market leader because while pepsico

discontinued the use of Slums in its distribution network, Coke continued it and within

one year, it was able to snatch considerable market share from pepsico. Acquisition of

well-established and favored brands like Thumps Up and Limca by Coca Cola India.

These two brands still constitute a bulk of sales for Coca Cola India.

52
To explore the reasons behind these developments this study will analyze the marketing

initiatives and policies of pepsico India in detail with particular focus on its partner

relationship management.

The above-mentioned objectives can be achieved by carrying a proper and planned

research involving different types and methods. The data collected for laid the

foundations for the study and gave a platform for the analysis and findings which lead to

the fulfillment of the objectives.

The data collected for research is primary and secondary. Primary data is collected by

observation, interviews and questionnaires. The data collection and analysis paves way

for the recommendation ad conclusion of the study that reveals some important findings

regarding the strategy and corporate structure and strategy of pepsico India.

53
 2. REARCH METHODOLOGY

MEANING OF RESEARCH:

Research in a parlance refers to a search for knowledge. One can also define research as a

systematic search for pertinent information on specific topic. In fact research is an art of

scientific investigation.

DEFINITION:

According to Clifford woody “Research comprises defining and redefining problem,

formulating hypothesis or suggested solutions, collecting, organizing and evaluating data,

making deduction and reaching conclusion to determine whether they fit the formulating

hypothesis”. A research design is a logical and systematic plan preparing for directing a

research study. It specified the objective of the study the methodology and techniques to

be adopted for achieving the objective. It constitutes the blue print for the collection,

measurement and analysis of the data. Methodology is defined as “A particular procedure

or set of procedures, the analysis of the principle or procedure of enquiry in particular

fields.” This chapter gives a clear picture of how the study has been carried on. It

summarizes the procedure in this study. It describes the objective of the study, the basic

for the final analysis the methods of data collection, for selecting samples and limitation

of the study. The value of any scientific and systematic study lies in its methodology.

54
TITLE OF THE STUDY:

“A STUDY ON DISTRIBUTION CHANNEL AT PEPSICO”

NEED OF THE STUDY:

The study was mainly conducted to identify distribution channel Strategy of PepsiCo.

55
STATEMENT OF THE PROBLEM:

The study was conducted to know the problems faced by the retailers and distributors and

their perception towards the company and the customer’s perception towards the PepsiCo.

PURPOSE AND OBJECTIVE OF THE STUDY:

The objective of the study was:

 TO know distribution channel Strategy of PepsiCo.

 To know the importance of Distribution channel strategy in Positioning of the

product.

 TO know the PepsiCo planning towards the distribution channel strategy.

 How strong relationship PepsiCo has with the distributors and retailers.

 Perception of consumer towards the PepsiCo product.

 Perception of retailers towards the distribution channel of the PepsiCo.

56
STUDY DESIGN:

“A study design is the arrangement of the condition for the collection and analysis of data

in a manner which helps the purpose of the study.” As the study was made on the

distribution channel of PepsiCo and such documents being considered confidential, the

questionnaire method of surveying the distributer was adopted and separate questionnaire

was prepared for the customers and retailers. Each question has 2-4 options, giving

sufficient options to the respondents. On the bases of the answers to these questions, the

findings are analyzed.

RESEARCH METHODOLOGY:

Method of research- Description research was used.

Tools used for data collection: A questionnaire was structured together the primary

Information.

SOURCES OF DATA COLLECTION:

The data has been collected from both primary and secondary methods have been used.

Primary data - It was collected by surveying the distributers of PepsiCo and Retailers
and randomly to the customers going to retailers.

57
Secondary data - it was collected from,

• General library research source like marketing book.

• Advertising journals like magazines and newspaper.

• Internet: PepsiCo website, wiki

Structured questionnaire: Structured questionnaire is a printed list of questions to

be filled by the respondents. The structured questions are being made as short as possible
and simple to understand. The questionnaire is designed such that it helps to elicit the
accurate information.

TOOLS AND TECHNIQUES:

The first hand information was collected by interviewing the Distributor regarding the

Strategies followed by the company for distribution channel. A questionnaire was

formulated and circulated to the retailers and customers. Hence the survey method is the
tool used here for data collection.

SAMPLING DESIGN:

• Sample unit: Distributers of PepsiCo, Retailers and customers

• Sample size: 100 respondents

• Sampling technique: Random sampling

• Sampling method: Probability sampling

• Place of study: Marathahalli, Bangalore

58
PLAN OF ANALYSIS:

The questionnaires were tabulated using tally method. The tabulated data was analyzed
and inferences were drawn. The tabulated data has been depicted in the form of a graph.
The promoters of different brands working there were not taken for sample size.

LIMITATION OF THE STUDY:

• Biased- The study was purely based on the information provided by the respondents
and they may be biased.

• Time constraint- The study was conducted in a short period of time and a detailed

study was not possible.

• Cost constraint- This being a academic study suffers from cost constraint.

• Area constraint- The area of study is limited to only Bangalore city.

• Sample constraint- The sample size was not large enough as planned, as the time
factor was the key limitation in the study.

• Confidential constraint- Due to confidential constraint certain information, not all

details could be obtained.

59
 CASE STUDY 1

Coca-Cola Innovation Sparks Supply Chain Revolution

By Alliston Ackerman & Alarice Padilla - 09/17/2012

Although The Coca-Cola Company’s drink offerings grew from sparkling to sports

drinks, waters, juices and more, the choices in its fountains were limited. With the need to

offer a greater number of beverage choices from a fountain dispenser, Coca-Cola was

challenged to reinvent the fountain business.

Engineers and scientists at Coca-Cola realized that micro-dosing technology (typically

used to measure precise amounts of medication) might be able to dispense “recipes” of

different beverages to increase the amount of choices in a single machine. Thus, Coca-

Cola Freestyle was born.

Ground-Breaking Innovation

“Coca-Cola Freestyle changes the fountain model from eight choices in a standard

fountain to more than 100,” explains Richard Gross, Group director of Enterprise

Business Solutions, Product Supply Systems, Coca-Cola Refreshments. “Coca-Cola

Freestyle also provides valuable data collection to customers. On a daily basis, each

dispenser can gather data related to machine performance, micro-dose cartridge usage and

beverage consumption.”

60
While the technology for the dispensing machine is unique and ground-breaking, what is

revealing is how the data is now being leveraged, particularly for rapid replenishment.

Coca-Cola Freestyle fountains are connected to the Coca-Cola network and are constantly

reporting sales data – by brand, location, and day part.

In the era of Big Data, the machine is also providing game-changing insights. “By

innovatively using the data in our SAP Supply Network Collaboration (SNC) module we

can react for the first time in a pure demand driven Supply Chain ecosystem to keep the

brand cartridges in stock,” adds Gross.

In order to ensure replenishment occurs reliably and efficiently, The Coca-Cola Freestyle

Replenishment System captures detailed data on every pour, plus data on the remaining

quantities in each of the cartridges. Consumption data for each machine is received into

SAP’s enhanced SNC module where it is consolidated by outlet and combined with past

historical consumption history, future forecasted demand, and any promotional uplift

forecasts for the specific time period to calculate a replenishment order.

The system also determines and plans shipments to outlets for full micro-dose cartridge

case quantities, so in the event a full case cannot be built, the SNC module will forecast

future demand and fill the case.

61
The enhanced SNC technology completes the Supply Chain ecosystem for Coca-Cola

Freestyle. By dispenser, consumption data by micro-dosed component is automatically

received and then utilized to drive automated order replenishment as well as production

planning and scheduling of materials and logistics.

Beyond Basic Visibility

Coca-Cola Refreshments is working to complete a connected supply chain ecosystem for

Coca-Cola Freestyle through automated rapid replenishment of the dispensers. By

processing the data received each night, the company can calculate and create

replenishment orders for any machine that requires it, then automatically process the

orders and send them to the distribution center for shipping to the outlets.

“This ‘ideal’ Supply Chain ecosystem creates a win for our consumers, our customers and

our company... This system will also help to facilitate the continued roll-out of Coca-

Cola Freestyle in the years to come,” concludes Gross.

Fast Facts

In 2009, the first Coca-Cola Freestyle dispensers were introduced providing more than

100 brands from a single machine.

Company at a Glance

The Coca-Cola Company markets and sells the drink concentrate to bottlers throughout

the world and to Coca-Cola Refreshments. Coca-Cola Refreshments is the largest bottler

62
in the world. In October 2010, The Coca-Cola Company purchased Coca-Cola

Enterprises and formed Coca-Cola Refreshments.

Breaking Ground

Currently, there are more than 9,000 Coca-Cola Freestyle dispensers in use across the

United States, with tests being conducted in Canada, Great Britain and Japan.

Words of Wisdom

“For innovation to succeed it takes vision to challenge an organization to do great things.

It takes strong leadership to drive and support the innovation design and development

process, and it takes a talented team of individuals that can execute and bring to the

innovation to life.”

— Richard Gross, Group Director Product Supply Systems Process & Solutions, Coca-

Cola Refreshments

63
 CASE STUDY 2

HINDUSTAN COCA-COLA BEVERAGES

PRIVATE LIMITED (HCCBPL)

_______________________________________________

3.1: A BOUT T HE COMP A NY

Coca- Cola was the leading soft drink brand in India until 1977, when it left rather than

reveal its formula to the Government and reduce its equity stake as required under the

Foreign Regulation Act (FERA) which governed the operations of foreign companies in

India. Coca- Cola re- entered the Indian market on 26t h October 1993 after a gap of 16

years, with its launch in Agra. An agreement with the Parle Group gave the Company

instant ownership of the top soft drink brands of the nation. With access to 53 of Parle’s

plants and a well set bottling network, an excellent base for rapid introduction of the

Company’s International brands was formed. The Coca- Cola Company acquired soft

drink brands like Thumps Up, Goldspot, Limca, Maaza, which were floated by Parle, as

these products had achieved a strong consumer base and formed a strong brand image in

Indian market during the re- entry of Coca- Cola in 1993.Thus these products became a

part of range of products of the Coca- Cola Company.

In the new liberalized and deregulated environment in 1993, Coca- Cola made its re- entry

into India through its 100% owned subsidiary, HCCBPL, the Indian bottling arm of the

Coca- Cola Company. However, this was based on numerous commitments and

64
stipulations which the Company agreed to implement in due course. One such major

commitment was that, the Hindustan Coca- Cola Holdings would divest 49% of its

sharehold ing in favor of resident shareholders by June 2002.

Coca- Cola is made up of 7000 local employees, 500 managers, over 60 manufacturing

locations, 27 Company O wned Bottling Operations (COBO), 17 Franchisee Owned

Bottling Operations (FOBO) and a network of 29 Contract Packers that facilitate the

manufacture process of a range of products for the company. It also has a supporting

distribution network consisting of 700,000 retail outlets and 8000 distributors. Almost all

goods and services required to cater to the Indian market are made locally, with help of

technology and skills within the Company. The complexity of the Indian market is

reflected in the distribution fleet which includes different modes of distribution, from 10-

tonne trucks to open- bay three wheelers that can navigate through narrow alleyways of

Indian cities and trademarked tricycles and pushcarts.

“Think local, act local”, is the mantra that Coca- Cola follows, with punch lines like “Life

ho to aisi” for Urban India and “Thanda Matlab Coca- Cola” for Rural India. This resulted

in a 37% growth rate in rural India visa- vie 24% growth seen in urban India. Between

2001 and 2003, the per capita consumption of cold drinks doubled due to the launch of

the new packaging of 200 ml returnable glass bottles which were made available at a

price of Rs.5 per bottle. This new market accounted for over 80% of India’s new Coca-

Cola drinkers. At Coca- Cola, they have a long standing belief that everyone who touches

their business should benefit, thereby inducing them to uphold these values, enabling the

Company to achieve success, recognitio n and loyalty worldwide.

FIGURE 3 : LOCATIONS OF COBO, FOBO & CONTRACT PACKAGING IN INDIA

65
MANIFESTO FOR GROWTH

3.2.1: VALUES

The values that the employees in the Company are expected to keep up to and work by
regular ly are as follows :

 LEADERSHIP: To take an initiative and lead, motivate and drive the team with
energy and zeal, to deliver outstanding results.

 INN OVATION: To continuously strive for progress and reach the next level of
excellenc e in everything we do.

 PASSION: To be deeply committed and display drive and energy in the quest to
deliver outstanding performance.

 TEAM WOR K: To unite for greater strength and work collectively as a group
towards the achieve me nt of common goals.

 OWNERSHIP: To think and act like owners at all levels; to have decisions taken
at the lowest appropriate level.

 ACCOUNTABILITY: To be individually and transparently accountable to our

colleague s for deliver ing agreed targets and goals.
VISION FOR SUSTAINABLE GR OWTH

To provide exceptional strategic leadership in the Coca- Cola India System- resulting in
consumer and customer preference and loyalty, through Coca- Cola’s commitment to
them, and in a highly profitable Coca- Cola Corporate branded beverages system.

M ISSION

66
To create consumer products, services and communications, customer service and
bottling system strategies, processes and tools in order to create competitive advantage
and deliver superior value to;

 Consumers as a superior beverage experience

 Consumers as an opportunit y to grow profits through the use of finis hed drinks

 Bottlers as an opportunit y to grow profits in volume s

 Bottlers as a trademark enhanceme nt and positive economic value added

 Suppliers as an opportunity to make reasonable profits when creating real value-

added in an environment of system- wide team work, flexible business system and
continuo us improve me nt

 Indian society in the form of a contribut io n to economic and social development.

QUALITY POLICY

“To ensure customer delight, we commit to quality in our thoughts, deeds and actions by
continua l ly improving our processes…Every time.”

67
ORGANIZATION STRUCTURE OF COCA-COLA IN INDIA

Chief Executive
Officer

Vice President
Supply Chain

Chief Finance
Officer

Human Resource
Director

Vice President BSG

Regional Vice
President (North)

Regional Vice
President (Central)

68
FIGURE 4 : ORGANIZATION STRUCTURE IN COCA-COLA, INIDA

Region Vice
President

AGM/AOD
Unit 1

AGM/AOD
Unit 2

AGM/AOD
Unit 3

AGM/AOD
Unit4

Region Finance

Region Human
Resource

Region Customer
Service

Region External
Affairs

Region Cold Drink

Region Legal

Region BSG

Region
Director/Manager
Market Execution

Region Capability
Region Channel
Management

69
 FIGURE 5 : ORGANIZATION STRUCTURE IN COCA-COLA, INDIA

3.4: OR GANIZATION STRUCTURE OF THE SALES DEPARTM ENT IN

HCCBPL:

AGM/AOD

Human General
Plant Route to Resource Finance Sales
Manager Market Manager Manager Manager

Area
Area Sales Channel Capability
Manager Manager Manager

Sales Sales
Marketing
Executive Trainers

Market Key
Developer Accounts

Distributors
And
Salesmen

70
FIGURE 6 : ORGANIZATION STRUCTURE OF THE SALES DEPARTM ENT

M ANUFACTURIN G UNIT OF HCCBPL

The manufacturing unit of HCCBPL, situated at Bidadi, is the third largest plant and one
of the bottling operations owned by the company. The Plant has one PET line which has
the capacity of yielding 209 bottles, per minute, two RGB (Returnable glass bottles) lines
which yields 600 bottles per minute each and one Juice line which yield 155 bottles per
minute. It caters to the whole of South Karnataka through a network of more than 80
distributors. There are three depots in Bangalore; N orth Depot, East Depot and Mega
Depot.

Manufacturing

Plant, Bidadi

Sales and

Distribution

Distributors Outlets

Outlets

FIGURE 7 : CHAIN FOLLOW ED FROM M ANUFACTURE TO DISTRIBUTION

71
M ANUFACTURING PROCESS AT HCCBPL

FIGURE 8 : M ANUFACTURING PROCESS

The manufact ur ing of the products of Coca- Cola involves the following steps:

 Water is received from the River Cauvery and it passes through the water
treatment plant, further passing through the sand filter and the activated carbon
filter, so as to attain pure cleansed water.

 In the syrup room, the concentrate received from another bottling plant situated at
Pune, is blended with the sugar syrup

72
  O nce both the water and the final syrup are ready, they are both mixed together
and sent to the carbonator section where Carbon Dioxide is added to the mixture
to form the final product.

 O n the other hand, simultaneously, the returnable glass bottles are depalletized,
inspected and washed for the purpose of filling in the final product in it. This step
does not take place in the PET bottle line as the bottles once used are disposed.

 The product is finally filled in the bottles, crowned (in case of RGB)/ capped (in
case of PET bottles), labeled and cased in order to be sent into the warehouse for
distribut io n.

3.7: BUSINESS PLAN M ODEL AT HCCBPL

Coca-Cola India Manufactures

division, Gurgaon Concentrate, Beverage

Regional Bottlers Manufactures finished

Bottles/Cans/Fountain

Customers

Consumers

FIGURE 9 : BUSINESS PLAN M ODEL

73
 SUPPLY CHAIN MANAGEMENT

HCCBPL has a wide and well managed network of salesmen appointed for taking up the
responsibility of distribution of products to diverse parts of the cities. The distribution
channels are constructed in such a way that the demand of customers is fulfilled at the
right place and the right time when it is needed by them.

A typical distribut io n chain at HCCBPL would be:

Production --- Plant Ware hous e --- De pot Ware hous e --- Dis tribution Ware hous e ---
Re tail Stock --- Re tail She lf --- Cons ume r

The customers of the Company are divided into different categories and different routes,
and every salesman is assigned to one particular route, which is to be followed by him on
a daily basis. A detailed and well organized distribution system contributes to the
efficiency of the salesmen. It also leads to low costs, higher sales and higher efficiency
thereby leading to higher profits to the firm.

3.8.1: D ISTRIBUTION ROUTES

The various routes formulated by HCCBPL for distribut io n of products are as follows :

 Ke y Accounts : The customers in this category collectively contribute a large

chunk of the total sales of the Company. It basically consists of organizations
that buy large quantities of a product in one single transaction. The Company
provides goods to these customers on credit, payments being made by them after
a certain period of time i.e. either a month of half a month.
Example s : Clubs, fine dine restaurants, hotels, Corporate houses etc.

 Future Cons umptio n: This route consists of outlets of Coca- Cola products,
wherein a considerable amount of stock is kept in order to use for future
consumpt io n. The stock does not exhaust within a day or two, instead as and
when required stocks are stacked up by them so as to avoid shortage or non-
availab ilit y of the product.
Example s : Departmenta l stores, Super markets etc.

74
  Imme diate Cons umption: The outlets in this route are those which require
stocks on a daily basis. The stocks of products in these outlets are not stored for
future use instead, are exhausted on the same day and might run a little into the
next day i.e. the products are consumed at a fast pace.
Example s : Small sized bars and restaurants, educationa l instit ut io ns etc.

 Ge ne ral: Under this route, all the outlets that come in a particular area or an
area along with its neighboring areas are catered to. The consumption period is
not taken into consideratio n in this particular route.
3.8.2: D ISTRIBUTION SYSTEM

 D ire ct dis tribution: In direct distribution, the bottling unit or the bottler partner
has direct control over the activities of sales, delivery, and merchandising and
local account manageme nt at the store level.

 Indire ct dis tribution: In indirect distribution, an organization which is not part of

the Coca- Cola system has control on one or more of the distribution elements
(Sales, deliver y, merchandis i ng and local account manageme nt)
 M e rchandis ing: Merchandising means communication with the consumer at the
point of purchase to convey product benefit, value and Q uality. Sales people and
delivery personnel both have this responsibility. In certain locations special teams
who go into business locations to specifica ll y merchandise our products.
3.8.3: D EPARTM ENTS IN VOLVED IN THE DISTR IBUTION PROCESS

The Distribut io n process mainly consists of three departments:

 D is tribution De partme nt: It appoints distributors and establishes a distribution

network, processes approved sale orders and prepares invoices, arranges logistics
and ship products, co- ordinates with distributors for collections and monitors
distribut io n stocks and their set- up.

 Finance De partme nt: It checks credit limits and approves sales orders in
compliance with the credit policy followed by the firm, records collections from
distributors, periodically reconciles outstanding balances from distributors,

75
 obtains balance confirmation from distributors and follows up outstanding
balances.

 Shipping or Ware hous ing D e partme nt: It dispatches goods as per approved by
order, ensures that stocks are dispatched on a FIFO basis, ensures physical control
over load out area and updates warehouse stock records in a timely manner.

76
SWOT ANALYSIS OF HCCBPL

3.9.1: STRENGTHS

 D ISTRIBUTION NETWORK: The Company has a strong and reliable

distribution network. The network is formed on the basis of the time of
consumption and the amount of sales yielded by a particular customer in one
transaction. It has a distribution network consisting of a number of efficient
salesmen, 700,000 retail outlets and 8000 distributors. The distribution fleet
includes different modes of distribution, from 10- tonne trucks to open- bay three
wheelers that can navigate through narrow alleyways of Indian cities and
trademarked tricycles and pushcarts.
 STRON G BRANDS: The products produced and marketed by the Company have
a strong brand image. People all around the world recognize the brands marketed
by the Company. Strong brand names like Sprite, Fanta, Limca, Thums Up and
Maaza add up to the brand name of the Coca- Cola Company as a whole. The red
and white Coca- Cola is one of the very few things that are recognized by people
all over the world. Coca- Cola has been named the world's top brand for a fourth
consecutive year in a survey by consultancy Interbrand. It was estimated that the
Coca- Cola brand was worth $70.45billion.
(ht t p://news.bbc.co.uk /1/hi/business/4706275.st m)

 LOW COST OF OPERATIONS: The production, marketing and distribution

systems are very efficient due to forward planning and maintenance of
consistency of operations which minimizes wastage of both time and resources
leads to lowering of costs.

3.9.2: WEAKNESSES

 LOW EXPORT LEVELS: The brands produced by the company are brands
produced world wide thereby making the export levels very low. In India, there
exists a major controversy concerning pesticides and other harmful chemicals in

77
 bottled products including Coca- Cola. In 2003, the Centre for Science and
Environment (CSE), a non- governmental organization in New Delhi, said aerated
waters produced by soft drinks manufacturers in India, including multinational
giants PepsiCo and Coca- Cola, contained toxins including lindane, DDT,
malathion and chlorpyrifos- pesticides that can contribute to cancer and a
breakdown of the immune system. Therefore, people abroad, are apprehensive
about Coca- Cola products from India.

 SM ALL SCALE SECTOR RESER VATIONS LIM IT ABILITY TO INVEST

AND ACHIEVE ECONOM IES OF SCALE: The Company’s operations are
carried out on a small scale and due to Government restrictions and ‘red- tapism’,
the Company finds it very difficult to invest in technological advancements and
achieve economies of scale.

3.9.3: OPPORTUN ITIES

 LAR GE DOM ESTIC M ARKETS: The domestic market for the products of the
Company is very high as compared to any other soft drink manufacturer. Coca-
Cola India claims a 58 per cent share of the soft drinks market; this includes a 42
per cent share of the cola market. O ther products account for 16 per cent market
share, chiefly led by Limca. The company appointed 50,000 new outlets in the
first two months of this year, as part of its plans to cover one lakh outlets for the
coming summer season and this also covered 3,500 new villages. In Bangalore,
Coca- Cola amounts for 74% of the beverage market.

 EXPORT POTENTIAL: The Company can come up with new products which
are not manufactured abroad, like Maaza etc and export them to foreign nations. It
can come up with strategies to eliminate apprehension from the minds of the
people towards the Coke products produced in India so that there will be a
considerable amount of exports and it is yet another opportunity to broaden future
prospects and cater to the global markets rather than just domestic market.

78
  HIGHER IN COM E AM ONG PEOPLE: Development of India as a whole has
lead to an increase in the per capita income thereby causing an increase in
disposable income. Unlike olden times, people now have the power of buying
goods of their choice without having to worry much about the flow of their
income. The beverage industry can take advantage of such a situation and enhance
their sales.
3.9.4: THREATS

 IM POR TS: As India is developing at a fast pace, the per capita income has
increased over the years and a majority of the people are educated, the export
levels have gone high. People understand trade to a large extent and the demand
for foreign goods has increased over the years. If consumers shift onto imported
beverages rather than have beverages manufactured within the country, it could
pose a threat to the Indian beverage industry as a whole in turn affecting the sales
of the Company.

 TAX AND REGULATORY SECTOR: The tax system in India is accompanied

by a variety of regulations at each stage on the consequence from production to
consumption. When a license is issued, the production capacity is mentioned on
the license and every time the production capacity needs to be increased, the
license poses a problem. Renewing or updating a license every now and then is
diffic ult. Therefore, this can limit the growth of the Company and pose problems.

 SLOWD OWN IN R UR AL DEM AND: The rural market may be alluring but it
is not without its problems: Low per capita disposable incomes that is half the
urban disposable income; large number of daily wage earners, acute dependence
on the vagaries of the monsoon; seasonal consumption linked to harvests and
festivals and special occasions; poor roads; power problems; and inaccessibility to
conventional advertising media. All these problems might lead to a slowdown in
the demand for the company’s products.

79
3.10: COMPETITORS TO HCCBPL

The competitors to the products of the company mainly lie in the non- alcoholic beverage
industry consisting of juices and soft drinks.

The key competitors in the industry are as follows :

 Pe ps iCo: The PepsiCo challenge, to keep up with archrival, the Coca- Cola
Company never ends for the World's # 2, carbonated soft- drink maker. The
company's soft drinks include Pepsi, Mountain Dew, and Slice. Cola is not the
company's only beverage; PepsiCo sells Tropicana orange juice brands, Gatorade
sports drink, and Aquafina water. PepsiCo also sells Dole juices and Lipton ready-
to- drink tea. PepsiCo and Coca- Cola hold together, a market share of 95% out of
which 60.8% is held by Coca- Cola and the rest belongs to Pepsi.
 Ne s tlé : Nestle does not give that tough a competition to Coca- Cola as it mainly
deals with milk products, Baby foods and Chocolates. But the iced tea that is
Nestea which has been introduced into the market by N estle provides a
considerable amount of competition to the products of the Company. Iced tea is
one of the closest substitutes to the Colas as it is a thirst quencher and it is
healthier when compared to fizz drinks. The flavored milk products also have
become substitutes to the products of the company due to growing health
awareness among people.

 Dabur: Dabur in India, is one of the most trusted brands as it has been operating
ever since times and people have laid all their trust in the Company and the
products of the Company. Apart from food products, Dabur has introduced into
the market Real Juice which is packaged fresh fruit juice. These products give a
strong competitio n to Maaza and the latest product Minute Maid Pulpy Orange.

80
FINDINGS

5.5.1: GRAPH 1

This graph depicts the total number of consumers divided on the basis of the age group
they belong to. The age of consumers included in the sampling activity ranged from 5
years to 75 years. Accordingly the age groups 5 to 15, 15 to 25, 25 to 35, 35 to 45, 45 to
55, 55 to 65 and 65 to 75 have been formulated. There is not set limit for the age of the
consumers mainly because ‘Minute Maid Pulpy Orange’ is a fruit drink and it can be
consumed by people across different age groups with no restrictions being laid and
consumers of all ages enter food world on a given day, either individually and in the case
of children, with their parents. The consumers who were sampled with were between 5
years and 75 years of age. The approximate age of the consumers was to be guessed and
noted down. Around 50% of consumers fall in the 25 years to 35 years and 35 years to 45
years age groups and the other 50% is distributed among the other age groups.

Total No. of Consumers based on Age Group

7% 6%

8%
10%

13%

29%

27%

5 to 15 15 to 25 25 to 35 35 to 45 45 to 55 55 to 65 65 to 75

GRAPH 1 : TOTAL NUM BER OF CONSUM ERS BASED ON AGE GROUP

81
GR APH 2

This graph makes a distinction between the number of males and number of females with
whom sampling was conducted. The percentage is almost the same in both categories, but
the number of females i.e. 365 is a little more than the number of males i.e. 331, due to
the fact that, most of the household shopping is done by women rather than by men.

GRAPH 2 : TOTAL NUM BER OF CONSUM ERS BASED ON GENDER

No. of Consumers based on Gender

52% 48%

Male Female

82
GR APH 3

The following graph denotes the feedback of consumers irrespective of the age group
they belong to or their gender. This is an overall perception of the consumers towards
‘Minute Maid Pulpy Orange’.

Opinion of people on Minute Maid Pulpy Orange

15%

11%

66%
8%

Liked Average Mix Reaction Disliked

GRAPH 3 : GENERAL REACTION OF CONSUM ERS ABOUT M M PO

From the above graph, it can be seen that, more than half the people who tasted the
product liked the product, i.e. they gave positive feedback about the product and 15% of
the consumers did not like the product. Out of the remaining 19% of consumers, 11%
people came up with mixed reactions i.e. they had reasons both to like and dislike the
product and a small chunk of 8% of the total consumers sampled with, said they did not
like the drink too much, neither did they love the drink.

83
5.5.4: GRAPH 4

The following graph denotes the perception of consumers on the basis of the age group
they belong to. This kind of a classification becomes necessary, because consumers of
different age groups have different tastes and moreover, the ages of consumers in the
sample range from 5 years all the way to 75 years.

Feedback of Consumers about MMPO

87
90

80 76
72
69
70

58
60
% of Consumers

50

40 40
40
31 30
30
24
22
18
20 17 16
12 12
1010
9 8 8 8
10 7 7 5
4
0 0
0
5 to 15 15 to 25 25 to 35 35 to 45 45 to 55 55 to 65 65 to 75
Age Group

Liked Average Mix Reaction Disliked

GRAPH 4 : REACTION ANALYSED ON BASIS OF AGE GROUP

From the above graph, it is evident that, across all age groups, a major portion of
consumers liked the product. Further opinions received from different age groups could
be compared and analysed as follows :

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 Ranging from ages 5 to 55, it can be noticed that, in every age group, more than
50% of the consumers have liked the product.
 In the age group of 5 years to 15 years, 87% of the consumers have liked the
products. The main reason behind this is children are fond of juices and sweet
substances. They crave to have anything that is cold and the product when
sampled, was made sure was cold and the remaining 13% is divided between
average and disliked. There were no consumers who gave mixed reactions. This
could be due to the reason that children cannot come up with good enough reasons
as to why they like or dislike a product. They just give their opinion.

 In age groups 15 years to 25 years, 25 years to 35 years and 35 years to 45 years

and 45 years to 55 years, the reactions were almost the same. This age group
mostly consisted of college going students, working people and house wives. The
percentage of consumers who liked the product ranged from 60 to 70%, so it
could be said that, around 3 quarters of consumers belonging to those age groups
liked the products. The main reasons for this could be that the most consumers
belonging to these age groups are health conscious and Orange juice is considered
to be one of the most nutritious and healthy juices. Almost 96% of the house
wives who were spoken to liked the product. House wives are home managers and
they make decisions when it comes to daily consumables and they wanted to buy
the products especially because they wanted their children and the rest of their
family to have it as it was safe and healthy.

 Consumers belonging to age groups 55 years to 65 years and 65 years to 75 years,

almost have the same perception about the product. More than 50% of the
consumers jointly fell in Disliked, Average and Mixed reaction categories mainly
because consumers belonging to the age group of 55 to 75 years are diabetics and
they do not intake or they are not allowed to intake excessive quantities of sugar;
Minute Maid Pulpy O range being a fruit juice and have added sugar in it was a big
no to them. Some of them were even apprehensive about the Coca- Cola brand
name attached to the product; according to them Coca- Cola makes only
carbonated soft drinks.

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 REFERENCES

B O O KS :

 Philip Kotlar, Marketing Management ; Analysis

Planning & Control; Prentice Hall, 9th Edition

 Saxena Ranjan, Marketing Management; TATA Mcgraw

Hill, 4th Edition, 2000.

 Dr. R.L. Varshney & Dr. S.L. Gupta, Marketing

Management; An Indian Perspective; Sultan Chand &
Sons Education Publishers, New Delhi; 2nbd Ed. 2001.

 Cravens & Hills & Woodruff, Marketing Management;

A.I.I.B.S. Publishers & Distributor, New Delhi, 4th Ed.,
2003.

 Gupta Santosh, Research Methodology & Statistical

Technique; Deep & Deep Publication, New Delhi, Ed.
2002.

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 V.S. Ramaswamy & S. Namakumari, Marketing
Management; MacMillian India Ltd., 2nd Ed.

 Batra Rajeev & John G. Myers & David A. AAKER;

Prentice Hall, 5th Ed. 2003.

 Kothari C.R. Research Methodology; Method &

Techniques, Wishwa Prakashan, New Delhi, 2nd Ed.

M AGAZINES:

 Bus ines s To-day (Weekly), July 2012

 Bus ines s Word (Weekly), Augus t 2012
 The Managers (Monthly), Augus t 2012
 The Week (Weekly), July 2012

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