PepsiCo PepsiCo entered the Indian market in 1986 under the name “Pepsi Foods Ltd. in a joint venture with two local part- ners, Voltas and Punjab Agro.” As expected, very stringent condi- tions were imposed on the venture. Sales of soft drink concentrate to local bottlers could not exceed 25 percent of total sales for the new venture, and Pepsi Foods Ltd. was required to process and dis- tribute local fruits and vegetables. The government also mandated that Pepsi Food’s products be promoted under the name “Lehar Pepsi” (“lehar” meaning “wave”). Foreign collaboration rules in force at the time prohibited the use of foreign brand names on products intended for sale inside India. Although the requirements for Pepsi’s entry were considered stringent, the CEO of Pepsi-Cola International said at that time, “We’re willing to go so far with India because we want to make sure we get an early entry while the market is developing.”
In keeping with local tastes, Pepsi Foods launched Lehar 7UP in the clear lemon category, along with Lehar Pepsi. Marketing and distribution were focused in the north and west around the major cities of Delhi and Mumbai (formally Bombay). An aggres- sive pricing policy on the one-liter bottles had a severe impact on the local producer, Pure Drinks. The market leader, Parle, pre- empted any further pricing moves by Pepsi Foods by introducing a new 250-ml bottle that sold for the same price as its 200-ml bottle.
Pepsi Foods struggled to fight off local competition from Pure Drinks’ Campa Cola, Duke’s lemonade, and various brands of Parle. The fight for dominance intensified in 1993 with Pepsi Food’s launch of two new brands, Slice and Teem, along with the introduction of fountain sales. At this time, market shares in the cola segment were 60 percent for Parle (down from 70 percent), 26 percent for Pepsi Foods, and 10 percent for Pure Drinks.