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Coca Cola's India coup: Buying Thums Up

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By 1993 when Coca-Cola returned to the country, Thumbs Up was the unquestioned king of the cola market with an 80 percent share of the $350 million soft drinks market.

Coca Cola's India coup: Buying Thums Up
At the time of economic liberalisation in 1991, few Indian products were as dominant in the country as Thums Up. Launched in 1977 by Ramesh Chauhan to fill the gap left behind by a departing Coca-Cola, the fizzy drink had caught the imagination of young Indians. Spurred on by catchy ads and memorable slogans like “Happy days are here again” and “Taste the thunder”, it had rapidly become the nation’s favourite cola. The initial competition from rival brand Campa Cola petered out after the untimely demise of its founder Charanjit Singh in 1990 and other drinks like Double seven, and Double cola, were no match. Thus, till 1990 when Pepsi relaunched in the country, Thums Up had the market all to itself.
By 1993 when Coca-Cola returned to the country, Thumbs Up was the unquestioned king of the cola market with an 80 percent share of the $350 million soft drinks market. Chauhan ran a tight ship and his company Parle Products was extremely profitable with its other brands like Limca and Gold Spot also contributing their share. Coca-Cola might have been one of the world’s best-known brands but it knew it had a battle royal on its hands in India.
Realising that a full-frontal assault on the reigning market leader would mean a bruising and long-drawn battle, Coca-Cola in a flanking move went after Parle’s bottlers. In the business of aerated drinks, the bottlers are the key to a product’s strength. At that point, most bottlers sold Parle’s products. The problem was the nature of the business wherein the owner of a franchise also owned the plant. Of its 60 odd bottlers, Parle owned only four. The others were free to choose who they went with. Given Coca-Cola’s deep pockets, its offer to the franchise holders was too tempting and most of them switched sides. By September 1993, it was evident that soon there would be barely a handful of bottlers left for Thums Up and Parle’s other brands. That would be a death knell for the company.
Chauhan, ever the realist, decided not to fight the unstoppable force of the world’s largest carbonated drinks company. He sold off all his brands for $60 million to the US multinational in September 1993. While the deal size seemed large at the time, looking at Thums Up’s eventual success, it does appear to have been a win for Coca-Cola which was able to ease out its biggest local rival and also grab the country’s most-loved cola for the price.
A month later when it launched its own cola in Agra with the Taj as the backdrop, it exuded the confidence of the winner who had won the game even before it had started. Of course, as it turned out, a far more formidable opponent was lying in wait. Three years ago, Pepsi-Cola had launched Pepsi, Seven-Up and Mirinda in India, and henceforth the two cola giants would face off in a no-holds-barred battle for the Indian consumer.
Chauhan went on to focus on his bottled water business under the Bisleri brand, where Parle is the current market leader.
—Sundeep Khanna is a former editor and the co-author of the recently released Azim Premji: The Man Beyond the Billions. Views are personal
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