The Cola War Gets Personal

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A mischievous Pepsi ad annoys Coke and signals a new turn in India's long-running soft-drink slugfest

Hrithik Roshan is the real thing. After appearing in just one film, the young Bollywood actor with the rippling muscles and the vulnerable look, a cross between Sylvester Stallone and Leonardo Di Caprio, has become India's No. 1 heartthrob. So it was only fitting that the world's biggest soft-drink company, Coca-Cola, should grab him as a local pitchman. But when Coke released its Hrithik commercial at the end of April, it soon found itself rudely upstaged by arch-rival Pepsi, which aired its own TV spot last month poking fun at Hrithik Roshan. In the Pepsi ad, a Hrithik look-alike wearing braces on his teeth is spurned by a pretty girl, who instead kisses Shah Rukh Khan, a Bollywood star who has appeared in Pepsi's cola ads for the past few years.

India's Cola War is getting punchier. Hrithik, clearly hurt, shot off a letter to Pepsi claiming, with unconvincing modesty, that he was a newcomer who needed encouragement, not a put-down. His fans, meanwhile, wrote angry letters to local newspapers and even organized a street demo in Calcutta. His father Rakesh Roshan, a prominent Bollywood filmmaker who produced and directed Hrithik's smash-hit debut Kaho Naa ... Pyaar Hai, complained publicly that Pepsi was ridiculing his son because it had lost the bidding battle for Hrithik.

The sizzle over Pepsi's mischievous 60-second spot underscores the fierce battle raging between the two multinationals for dominance of India's $1 billion soft-drink business. Pepsi has been selling in India since New Delhi opened the market to foreign companies in 1991. Coca-Cola, which was forced to leave the country in 1977, returned with a bang in 1993, buying out the leading local cola, Thums Up, and grabbing a big slice of the action. But the worldwide leader's cola drink still ranks No. 3 in India, behind Pepsi and Thums Up. Expect more fireworks:the American giants are pouring in millions more in marketing dollars, signing up as pitchmen some of India's top actors, cricketers and pop singers at fabulous fees. The more the competition, the more the noise, the better, says Ireena Vittal of consulting firm McKinsey & Company. It'll help the soft-drink market to take off.

Pepsi is obviously enjoying the latest fracas. Its spokesmen cheekily deny that the model with the ugly smile in its new ad is meant to be a Hrithik look-alike (There's only a passing resemblance, a spokesman says rather disingenuously). It's the most entertaining marketing clash since the two tangled in 1996 over the cricket World Cup, which was played on the subcontinent. Coca-Cola spent more than $4 million for the rights to be the Cup's official sponsor. But Pepsi responded with an irreverent TV spot poking fun at Coke and appealing to the disdain many young people have for all things official. As a result, Coca-Cola got some mileage from being the official drink while Pepsi boosted its image as a cola for fun-loving, free-thinking people.It was barrels of fun, says Vibha Rishi, Pepsi's marketing director for India. Indeed, Pepsi's ads in India consistently focus on youth, who constitute more than half of the nation's estimated 150 million soft-drink consumers. Coke, meanwhile, has run a more broad-based campaign appealing to the entire family.

With the Hrithik song-and-dance ad, Coke seems to be acknowledging that, in India at least, the youth market is where it's at. More than a third of India's 1 billion people are under 18. As the country develops economically, the young, especially in urban India, will be eating and drinking very differently, says Vittal. McKinsey, which completed a study of India's food and beverage business in 1997, predicts that by 2005, the soft-drink market will grow to around $2.4 billion. That said, India's per-capita consumption of soft drinks is still a paltry six bottles a year, compared with 15 in Pakistan, 22 in China and more than 600 in Mexico. In India, drinking a cola is not an everyday habit, says Vikram Sakhuja, Coca-Cola's marketing manager for India. It is reserved for special occasions--religious festivals, family outings, sports events. Coke and Pepsi hope to change this by getting the young hooked on cola.

There are other obstacles, though. With Indian per-capita incomes still relatively low, price matters. A small increase last year, for instance, stagnated soft-drink sales. And Indian taste buds represent a stumbling block: Coke and Pepsi are simply too bland to go with some highly spiced provincial cuisines. We need more flavor, something distinctive and strong, says Ramesh Chauhan, a former soft-drink magnate who created the somewhat spicy ThumsUp brand. Since neither Pepsi nor Coke would ever countenance changing their sacred formulas, they'll continue to rely on stars like Hrithik to help win over young Indians. But it's a nasty battle out there.