‘Beat the heat this summer’ – Beverage makers cash in on what they know best!

With the ‘hot weather season’ as the Indian Meteorological Department calls summer here, we can already feel the heat with above-normal temperatures. The fans, air conditioning, and coolers are in full ‘swing’ mode, and ice-creams and beverages are selling like ‘hot cakes,’ the pun intended. What is interesting to see is the variety of new flavors and new players in the soft drinks category. Today, Indian consumers have access to various global and local soft drinks. This article is about the evolution of the soft drink industry in India and the legendary cola wars between global and local brands.

Many global soft drink brands have tasted success in India in the last three decades, typically with cola, orange, and lime flavors. However, in the past few years, local Indian soft drink brands have started giving global brands stiff competition and forced many global brands to integrate local cues and elements in their product offerings. Several global players have introduced local flavors (Aam Panna, Nimbu, Jeera, etc.) that do not fit in their otherwise ‘Global’ lineup, displaying local integration and conveying that their brands are sensitive to the deep-rooted Indian culture and tastes.

On the other hand, local brands, with their deep knowledge of Indian consumers’ cultural and taste palettes, have started offering quality products with a level of sophistication that is comparable to the global brands even.

Interestingly, the history of soft drinks in India is almost two centuries old. However, most of the revolution on the coexistence of global brands and local brands happened after India became independent. The two big names in the soft drink industry then and even today remain the same. They left India in the 1960s owing to low sales and stringent Foreign Direct Investment (FDI) rules.

The global giants left but left the Indians wanting more. In a one-of-a-kind attempt, the Indian Government back in 1977 even launched a soft drink brand. Yes, you read that right. However, the brand struggled to survive for long. The exit of the two global giants paved the way for local Indian brands to explore the market and encouraged Indian brands to meet the consumers’ needs.

Post-Liberalization: On a bold front, in India, in the 1990s, post-liberalization, a lot changed. While the local brands were getting more comfortable in the Indian market, the global giants returned. This time, stronger and more focused on connecting with the consumers and keeping them engaged rather than only making the product available for consumption.

Fond memories of millennials’ childhood include the exchange of crowns for cassettes or stickers of heartthrob celebrities endorsing the brands and a product with slightly premium pricing. The global brands even followed a strategy to buy out the local brands and kill them or bring them under their banner if it was a product to reckon with.

Spectacular Comeback of the Local Brands: Over the next decade, we witnessed a sort of “reverse engineering,” where local brands learned the best practices from global brands not just in developing the product but also in the activities surrounding the product, including innovative packaging and sizing. For example, unique soft drinks based on ethnic digestives such as jeera, ginger, or mango, and kokum flavored soda as coolers. Some local pioneers of the flavors mentioned are so strong in their market presence that they have now turned down offers to be bought by Indian conglomerates and the ‘Big Two’ soft drink companies from the United States. Some local brands have brought into practice non-returnable glass bottles, which is an excellent step in cementing confidence regarding the hygiene practices adopted. A well-marketed brand with nostalgia and an array of flavors, such as golgappa, chilled rasam, kokum, etc., resonates deeply with consumers from different states. As testimony, in 2019, local brands grew at almost twice the rate of global brands (Economic Times, 2019)

The love for local brands is now being explored by the revival of older lost brands as well. Now, Indian conglomerates are promoting good Indian brands of yesteryear at a reasonable price. Let alone the attempts by the market leaders to acquire a reasonably growing local brand.

Changing times: India is witnessing changes. A rise in nationalism (Pew Research Center, 2021), on the one hand, and complementary initiatives like “Make in India” on the other. The Combined effect of “Make in India” and nationalism brings in a touch of ethnocentrism. Ethnocentric consumers are those who show reluctance to use services provided by foreign companies because of a sense of loyalty towards products/services from their home country. Are these developments here to stay, or will they fade away soon enough?

Will Nationalism and nostalgia create a brand that does not have to compete in the cola wars with the Big Two? Or Will the Big Two take a cue and appreciate that going local is also a way forward? Either way, these are management lessons in the making. Time will tell. Till then, Cheers to a happy summer….

Dr. Shilpa Praveen is an Assistant Professor in the area of marketing at T A Pai Management Institute, Manipal Academy of Higher Education, Manipal.