Third place coke takes steps to move up in India

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BOMBAY -- Coca-Cola India has agreed to buy two key bottling plants in the nation's capital of New Delhi. It was seen as further evidence of Coca-Cola taking a more agressive position in the market.

Coke has signed a memorandum of understanding to buy Delhi Bottling Co. and Coolaid, both franchisees of Coca-Cola. Ramesh and Prakash Chauhan, who sold India's largest soft drinks company, Parle, to Coca-Cola Co. in 1993 for $70m, are the sellers.

The deal is expected to close by mid-October and be followed by purchase from the same two brothers, of their Bombay bottling operations. According to industry estimations, Coca-Cola will pay around $59 million for the acquisitions.

Coca-Cola in the past few months has increased its market profile by signing up Indian cricketing icons and movie actors to endorse its brands, a move that mimics rival PepsiCo India's successful strategy.

Though it entered India as a clear market leader, Coca-Cola lost ground in the cola market when Pepsi overtook Thums Up as the No.1 cola brand. Thums Up is a Parle cola that currently holds a 14.5% share of the $750m Indian soft drinks market. Pepsi's eponymous cola leads with a 27% share and Coke is third with 12.5%, according to May 1998 research by the Indian Market Research Bureau. In May 1997, Coke held an 11.8% share, Thums Up 16.9% and Pepsi 24.8%.

Overall, however, Coca-Cola India's brands lead the local soft drinks market with an estimated 57% market share vis-a-vis PepsiCo's 40%, according to June 1998 findings.

Copyright September 1998, Crain Communications Inc.

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