Coca Cola: the American drink that is basically capitalism in a bottle.
During the 20th century, as capitalism spread around the world, so too did Coca Cola to
the point where the only place left where you can’t get it today is North Korea.
But Coca Cola has had an easier time in some places than in others and in this video we’re
gonna see how it took Coca Cola almost half a century to capture one of the world’s
biggest markets, India.
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Coca Cola’s entry into India, like in many other markets, came on the back of pure opportunism.
India had become independent in 1947 and within three years Coca Cola had already established
a bottling plant in New Delhi.
Now, India’s first independent government was determined to take India down the path
of socialism, which of course meant supporting local industry at the expense of foreign companies.
In other words, Coca Cola had few sympathizers in the Indian government, but that didn’t
stop the company.
Coca Cola’s idea was to become entrenched in Indian culture before the government could
really respond.
After all, in those early years independent India had much bigger problems to deal with
than a foreign fizzy drink.
Thus, while India was recovering from a bloody conflict with Pakistan, Coca Cola was busy
setting up a distribution network across the country.
Coca Cola’s timing was perfect: just a few years later Pepsi was denied entry into the
Indian market while Coca Cola was making bank.
Coca Cola’s success in India, however, would eventually become its undoing.
As successive governments leaned ever further towards the left, Coca Cola became public
enemy No. 1 in the eyes of Indian politicians.
A favorite statistic of theirs was the fact that while only 10% of India’s villages
had safe drinking water, 90% had access to Coca Cola.
In the eyes of a protectionist government, Coca Cola being more accessible than water
was a very bad sign, but overthrowing the powerful American company would not be easy.
Coca Cola had indeed become entrenched in Indian society and it would took a very severe
crisis to bring it down.
Such a crisis did happen in the mid 1970s, when India was actually on the brink of revolution.
Following a third war with Pakistan and an almost dictatorial control of government by
Indira Gandhi, civil unrest against the socialists was growing out of control.
Nationwide strikes and political assassinations were becoming the norm and to deal with that,
Gandhi issued a state of Emergency between 1975 and 1977.
This dark period of Indian history saw thousands of political opponents thrown in jail, a total
suspension of civil liberties and government control over the press.
It also presented a great opportunity for the government to finally throw Coca Cola
out of India.
Amidst the chaos, the socialists enacted a law that prevented foreign companies from
owning more than 40% of any business in India.
Coca Cola would have to effectively give up its ownership and more importantly: it would
have to surrender its secret recipe and to make it locally in India, rather than importing
it from the US.
Faced with little choice, Coca Cola left India in 1977 alongside more than 50 other American
companies and this left a huge void in the Indian soda market, not just for Coca Cola
but for Sprite as well.
Local competition was of course happy at this opportunity and over the next decade they
expanded rapidly, filling the market with substitute products.
Even the government cashed in by creating a state-sponsored cola called Double Seven
to commemorate the end of the Emergency.
Coca Cola, however, is not so easily defeated, and when the socialists finally lost their
grip on India in 1991, Coca Cola came back with a vengeance.
Riding a wave of economic liberalization, Coca Cola re-entered India in 1993 and that
very same year they acquired the most popular brands that had developed in their absence.
In fact, all four sodas I mentioned earlier were purchased by Coca Cola for $40 million,
giving the company a staggering 50% market share from day one.
Since then Coca Cola’s domination has only increased, and today their share has risen
to just over 60%, with its only real competitor being Pepsi at around 35%.
So despite decades of political opposition, Coca Cola did eventually conquer India and
the way it did so was honestly quite the power move.
And speaking of power moves, Audible, who were kind enough to sponsor this video, have
just released Adam Grant’s new book of the same name.
In Power Moves you’re gonna hear the insights of over twenty leaders in business and technology
on the shifting nature of power in the modern world.
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You can expect my next video two weeks from now, and until then: stay smart.