It may have taken some time--a little over two decades at that, but now it seems to be happening. After trying to initially kill the desi brands it bought over from the Chauhans of Parle back in 1993, American beverages major Coca Cola is finally giving Thums Up and Maaza their due. Earlier this week, the firm launched a new variant of the mango drink--Maaza Gold, a thicker, smoother and more premium variant of India's largest selling fruit drink brand. It followed the introduction for the first time ever of a variant of its other desi bestselling fizzy drink Thums Up last month. Coca Cola says it expects both Thums UP and Maaza to become billion-dollar brands by 2020 and 2023 respectively. If they do that, they would be the first homegrown brands to achieve such a scale.
In the case of Maaza, the addition of a variant isn't a first. In 2005 Coca Cola had introduced an orange and pineapple versions of the drink but they had a short life-span due to a tepid response from the market. In contrast, the company has persisted gloriously with its other global fruit brand Minute Maid even though it also did not initially find favour with consumers in India. While Maaza is getting an additional variant only now, Minute Maid, despite being a much smaller brand already has over 10 versions in the market.
It is an even more glaring story with Thums Up. When Coca Cola had acquired the brand in 1993, Thums Up was by far the largest selling beverage in the market with a 36 percent share. But it competed with Coca Cola's own mother brand Coke directly and for the next few years the company tried to replace one with the other. With limited success. In this confusion, its arch-rival PepsiCo gained in the bargain in the mid-90s.
A course correction happened soon after--Thums UP was propped up and brand ambassadors were roped in-- but Coca Cola has never really been able to shed its perception of step-motherly treatment to the desi brands it had acquired. Thums UP's eventual ceding of ground to stablemate Sprite as the largest selling beverage in India a few years back adds to that perception.
The quick burial given to some of the other brands that were acquired from Parle along with Thums UP and Maaza, like Gold Spot (it competed with Fanta) and Citra (competitor to Sprite) and the relative lack of push to Limca are often quoted as evidence. The company has forever denied such conjectures but is never open to share the money spent on campaigns or the distribution spread given to the desi brands versus its core global brands.
"It is an open secret that Coca-Cola tried hard to kill the local brands it owned. It managed to do so with a few but Thums UP and Maaza are resilient brands and eventually, they had to concede that these wouldn't just die," says Arvind Singhal, chairman and managing director at consulting firm Technopak. "It is not so much of desi versus videshi. It is simply that the multi-national firms have their own legacy and their own brands to promote."
So why this sudden change of heart?
For one, unlike in the past Coca Cola today is chasing growth in India that has eluded it in recent times. Over the last 3 years, it has suffered a 2 percentage point decline in market share in the industry-from 35.5 percent in 2014 to 33.5 percent in 2016. The main concern is the gradual but definite shift in consumer preference away from fizzy drinks to healthier beverages.
Coca Cola retains its hold in the carbonates segment but unfortunately, the segment itself is lagging overall industry growth. It grew at a relatively modest 3.9 percent between 2011 and 2016, whereas the overall soft drink market grew by 9.7 percent during the same period. In the last 3 years alone, the share of carbonated beverages in the Rs 60,000 crore soft drink market in India has come down from 51 percent in 2014 down to 46 percent last year. Adding a new stronger flavored variant to the Thums Up is expected to bring some zing back into this category.
With the Maaza Gold in tow, it is part of a strategy that sees Coca Cola expand and try and further strengthen its presence in segments it is already well entrenched while foraying into newer territories to tap the changing preference of the market. It is readying RimZim, a mixed spiced soda drink which was another product it had acquired from Parle, for a national launch. Similarly, a new sub-brand of its packaged water nameplate--Kinley Flavors is also being launched that will offer ethnic flavored sparkling water to the market.
It is a response to increasing competition from strong local firms like Dabur and Parle Bisleri and a host of upstarts like Hector Beverages, Xalta, and Fresca. Despite its leadership position, it is also a tacit acceptance that somewhere Coca Cola India has missed the pulse of the market. On some occasions, the company itself has admitted as much. "We have leader brands. Sprite, Maaza, Thumps Up, in particular, in their categories have tremendous equity. Our job now is to leverage those brands to help grow the industry,"said John Murphy, President, Asia Pacific in an address to investorsin USlast month. "The triangle in the middle. The bottom half of the pyramid in India, almost 300 million people, we have tried so many times in my time in the Coca-Cola system to crack the code there and we haven't done it. But we've got a team of pretty smart people who want to have the legacy to be the first to do so." The realization, albeit late, that Thums UP, Maaza, Limca and RimZim--quintessentially Indian brands, have a role to play in cracking that code in India, is welcome. The old-timers can now say " We told you so".