Coca-Cola In India: Understanding Culture To Do Business

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As The Coca-Cola Company (NYSE:KO) learned when returning to the Indian market in 1993, every culture is different and there is no such thing as “one size fits all” when it comes to selling products. An essay by The Coca-Cola Company Coke Chairman and CEO Muhtar Kent provides a fascinating insight into the importance of understanding culture in doing business.

Coke had first come to India in 1950, and was growing solidly until 1977 when The Coca-Cola Company (NYSE:KO) and virtually all other multinational companies closed up operations in 1977 after the government began seizing corporate assets. Coke returned to India in 1993 when the laws were liberalized, but found that all of its successful, well-honed marketing strategies simply weren’t getting the job done in India.

Understanding Indian culture

Mr. Kent begins his essay with a wonderfully evocative description of India and an admonition — “If you come to India with some grand, predetermined strategy or master plan, prepare to be distracted, deterred, and even demoralized.”

He applies his admonition to the the circumstances of The Coca-Cola Company (NYSE:KO) in 1993 upon its return to India. Kent describes the first few years as difficult. “We struggled at first to find and keep talented employees. We learned that although Indian consumers were eager to embrace global brands, they resented any hint of global corporate dominance. It took us time to understand that small stores, many operated by families out of the front of their homes, were an unappreciated source of economic opportunity.”


Kent also points out that Coke’s eventual success on the subcontinent hinged on understanding Indian culture. “The key to this success has been learning to see the Indian market as it is, not as we wished it to be.” It turned out this meant most Indians preferred to buy Coke from local markets rather than from large grocery stores.

Coca-Cola thriving in India today

India now ranks among The Coca-Cola Company (NYSE:KO)’s top ten markets in unit-case sales, and sales growth continues to be impressive. Earlier this year it was announced that The Coca-Cola Company and its global bottling partners were planning to invest $5 billion in India operations between 2012 and 2020. Kent is even willing to go out on a limb and project that India will be one of Coke’s top five global markets by 2020.

Also see: David Winters On Why Coke Is Now His Top Stock 


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