Pepsi to Sponsor IPL to Beat Coca-Cola and Win India’s Market

PepsiCo Inc. aims to conquer India

And here we go again. The rivalry between Coca-Cola and PepsiCo seems to be endless and India is a new battlefield of the two soft-drink giants as PepsiCo Inc. will sponsor the Indian Premier League which is due to start on the 3^rd of April. The move is aimed at winning a bigger market share in the fast growing India and the sponsorship of the cricket tournament is expected to help in that as the game is almost religion in the South Asian country. PepsiCo Inc. reposes hope in the title sponsorship rights for five years starting in 2013.

Pepsi’s Sponsorship of IPL

Back in November 2012, PepsiCo Inc., the world’s second-largest soft-drink company, beat all its rivals and got the title sponsorship of the  famous and popular Indian Premium League. Under the terms of the title sponsorship contract, the company will spend astonishing $73 million in the five-year-period. The company will also market a special edition 500 milliliter can which is expected to win hearts of cricket fans. Deepika Warrier, vice president Marketing-Beverage, PepsiCo India, also informed that zealous fans would have a chance to watch games with Indian celebrities as well.

Apart from sponsoring the Indian Premier League, the company will also be the official pouring partner for almost all teams taking part in the widely-watched tournament. Gautham Mukkavilli, CEO at PepsiCo India, underlined: “Winning the title sponsorship [of the IPL] was just the beginning. We are committed to back it with smart, strategic and high-decibel marketing and activation plans that will help us maximize the tournament’s potential." Certainly, the PepsiCo Inc.’s sponsorship of the Indian Premier League does not go Coca-Cola Co.’s way.

According to estimates, the PepsiCo Inc.’s sponsorship of the Indian Premier League will return at least five times the sum of staggering $73 million as the tournament always takes place in a summer. The timing is perfect as during summer months soft-drink consumption climbs significantly.

India’s Market & Soft Drinks

No doubt that the India’s market is very much attractive to many companies, including soft-drink producers. In addition, the popularity of the Indian Premier League is so high and therefore companies are vitally interested in the sponsorship. Thus the $73 million sponsorship should not be surprising as the market for soft drinks in India is estimated to surge to over $18 billion by 2017.

Hence PepsiCo Inc. and Coca-Cola hope for a rise in consumption of soft drinks in India so that they could benefit from sales. Latest findings of a survey are not too optimistic as they show that the per capita consumption of soft drinks in India is very low with just modest six bottles per year, sic! According to a Coca-Cola’s report, per capita consumption of the company’s products is bashful 12 bottles, compared to 38 in China which also happens to be an emerging market.

Undoubtedly, India has become the battlefield and PepsiCo Inc. and Coca-Cola Co. will not give place to each other as there is a lot at stake.  Thus companies invest as they expect to benefit from the fast growing market.