NEW DELHI — Coca-Cola Co. offered to buy a refrigerator for Rajesh Yadav's store if he would sell only the company's drinks.
Yadav kept his part of the bargain: Lines of Coke and Diet Coke cans glisten behind the glass screens of the fridge. A red-and-white banner with a Bollywood film star chugging a bottle adorns his storefront.
Yet Yadav doesn't mention his partner when he describes his shop.
"I sell Pepsi and cigarettes," Yadav said in Hindi, India's most widely spoken language.
Still, he isn't reneging on his deal. Pepsi became a synonym for cola in Hindi after having the market to itself for three years until 1993 — a linguistic advantage that translates into higher sales. Its cola brand's market share is 73 percent greater than Coke's, according to Euromonitor, a consulting firm.
Coca-Cola had pulled out of India in 1977 after a change in government regulations would have forced it to partner with an Indian company and share the drink's secret formula. PepsiCo Inc. joined with two Indian companies and introduced Lehar Pepsi in 1990. Coke re-entered the market in 1993, after foreign brands were allowed to operate without Indian partnerships.
"Pepsi got here sooner, and got to India just as it was starting to engage with the West, and with Western products," said Lalita Desia, a linguist at Kolkata's Jadavpur University who studies how English words enter Indian languages. "And with no real international competition, 'Pepsi' became this catch-all for anything that was bottled, fizzy and from abroad."
In much of the Hindi-speaking belt of northern India, home to three of the five most populous states, children begging at street corners will point to bottled juices inside cars and plead for "Pepsi." Mahipal Singh, who drives a truck route between Delhi and Bihar, terms his rest stops "Pepsi-wepsi" breaks, regardless of what he is drinking.
"Saying 'Pepsi' connotes getting a soft drink," said Kiran Bhushi, an anthropologist at Indira Gandhi National Open University who researches middle-class consumption patterns and has consulted for both companies. "How exactly does someone like Coke dislodge this idea from a consumer's brain?"
Tea on top
Coca-Cola must also contend with consumer preferences for other drinks. About 90 percent of India's beverage market is composed of tea, milk and coffee-based drinks, with bottled soft drinks holding less than 5 percent, according to Harish Bijoor, who runs a brand consulting and strategy business in Bangalore. The company relies on drinks other than Coke to be the country's top beverage seller.
"Cola in India is still an evangelical task, because it's not a lifestyle habit yet," Bijoor said.
Coca-Cola needs growth in overseas markets to offset at least four years of declining U.S. sales volumes for its soft drinks.
India's economy expanded 8.8 percent in the three months through June. Growth in the United States, the biggest market by revenue for both Coca-Cola and PepsiCo, slowed to 1.6 percent.
Sales by volume in India surged 31 percent in 2009, Coca-Cola Chief Executive Officer Muhtar Kent said in February without providing specific numbers. Indian sales of Coca-Cola, Diet Coke and Coke Zero grew 25 percent, according to the company's annual report. Last year, Coca-Cola turned a profit in India for the first time since re-entering the country in 1993 after a 16-year absence, according to spokesman Kamlesh Sharma.
While Coca-Cola uses the cola brand to drive market share in other countries, its top three products in India by sales volume are Kinley bottled water, Thums Up cola, and Sprite, according to Euromonitor. Mirinda ranks fourth and the Coca-Cola brand is at No. 5. Thums Up, a lemon drink called Limca, and an orange drink called Gold Spot were acquired by Coca-Cola in 1993.
"Pepsi is bigger than Coke as a brand, but Coke as a company has very smartly introduced other brands that have done very well," said Bijoor, the consultant.
That's Coca-Cola's strategy, said Atul Singh, the Atlanta-based company's president for India and South West Asia.
"We want every part of our portfolio to grow, so that any consumer, on any occasion, anywhere in India, makes a choice to drink a Coca-Cola product," he said.
Going after new business
Purchase, N.Y.-based PepsiCo, the world's largest snack-food maker, will invest "aggressively" in emerging markets, according to Chief Executive Officer Indra Nooyi. Last year's sales in Asia, the Middle East and Africa grew 12 percent. In India, retail sales of its products, including Frito-Lay potato chips, Quaker Oats and fruit juices such as Tropicana, are worth $1.5 billion. PepsiCo had $43.2 billion in sales last year.
"The Pepsi brand becoming the default name for the cola category is certainly a big positive," spokesman Sandeep Arora said in an e-mail. "It can also be a double-edged sword if the marketer is not able to differentiate the brand from the rest of the category."
Coca-Cola has run an advertising campaign called "Thanda Matlab Coke" ("Cold Means Coke"). North Indians use "thanda," the Hindi word for cold, as a noun when offering someone a drink.
"It was definitely a good idea," said Bhushi, the anthropologist. "If Pepsi means cola, then emphasizing that a 'thanda' means Coke is perhaps the best way to gain control of the vocabulary."
"Thanda Matlab Coke" runs across the red-and-white poster at Yadav's New Delhi store. His biggest seller, though, isn't Coke.
"People ask for Pepsi, and I give them a Thums Up or a Coke," he said. "Thums Up they don't mind, but Coke, sometimes they say no."
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