How Coca-Cola killed Thums up
Created on 15 Dec 2021
Wraps up in 7 Min
Read by 8.7k people
Updated on 11 Sep 2022
It all began in India in the early 1950s; the country was newly released from the shackles of British Rule- free & ready to grow. A company from far away in Atlanta had its eyes on the Indian market wanting to introduce a new style of beverage intending to take over the Indian beverage industry by storm. The company was... Drum rolls… COCA-COLA!
“I came, I saw, I conquered,” said Coca-Cola, as people welcomed the drink with much love. On the other hand, India was technically a newly formed nation and didn't have a Foreign Exchange Act back then, due to which Coca-Cola made huge money, enjoying a 100% foreign stake.
The Indian soft drink industry was taking a new shape, and Coca-Cola remained the leader. The brand and its name became so popular that big conglomerates like Parle tried to enter the market by launching its drink called Gluco Cola. Did you see it? The game of copying began.
Coca-Cola practically became the market leader; on the other hand, Parle was trying to copy them, compete with them, and be like them. (Kaale coke pe kaali nazar, much?)
By the early 70’s Coca-Cola was making huge profits but not giving much back. Thus one day, politics happened!
The government was not in favor of companies gaining huge profits from India and not investing it back in the country. To stop companies like these, the government came up with an act in the hope that Coca-Cola would not abide by the conditions of the act and leave the country.
Thus, Foreign Exchange Regulation Act, 1974 was introduced. Where Coca-Cola was enjoying and using 100% of its profit however it wanted, with the act, it was reduced to just 60%. That means now Coca-Cola had to invest 40% of its profits in India and nowhere else. Surprisingly they agreed on this because they wanted to stay in the country and never leave.
But, this was not the end of the problem; this was just the beginning. Enter George Fernandes, the destroyer.
In 1977 a new government was formed called Janata Party; one of the key members of the party was George Fernandes. He and the party were true nationalists and against foreign companies, and the number one company on their radar was Coca-cola.
The company till now was abiding by the rules and regulations formed by the Indian government because it wanted to stay in the Indian Markets. But Fernandes was on a mission to kick the company out and tried a lot in order to do so, but nothing happened.
Out of context, but why not! Coca-Cola’s most prized possession, its Recipe or formula, is often regarded as the World's most guarded secret.
Bazingaaa, Fernandes found a soft spot where it would hurt the most!
The company was asked to reveal its secret formula or leave the country. That was it! Coca-Cola would kill but never reveal its secret formula. They were left with no choice; they had to leave.
The company and its product were so popular in the country that the Indian Soft drink market was left in a void, consumers especially the youth, wanted a drink like coke. One man saw a great opportunity here. He was Ramesh Chauhan, aka The Creator in our story!
This young MIT graduate wanted to fill the void of a cola drink in India and identified how much we Indians loved spices. He experimented with Indian masalas for months and months and finally came up with a drink that was desi, fizzy, spicy, and completely Indian.
They named the drink…*Drum rolls again* Thums up. 👍
Thums up was launched in the Indian market in 1977 under Parle (It's ironic how Parle, since the beginning, was trying to copy Coke).
The brand instantly became popular in the country with its unique taste, name, and marketing. Everything was on point. The consumers obsessed with Coca-Cola became obsessed with Thums up. People related to the drink, and the brand appeared in many Hindi Films. Taglines such as Taste the Thunder became the millennial lingo.
Decades passed, and Thums up remained the market leaders till the early 90’s and no other company could compete with Parle. They were on the top and wanted to remain there!
Such good times, right? Just like they’d live happily ever after! But the thunders & storms awaited.
Again, politics happened. The Indian economy began undergoing massive changes, and the revolutionary LPG or Liberalisation, Privatisation, and Globalisation reforms came into effect. These models allowed foreign companies in India in a more liberal way.
Guess Who's Back?
After decades, our old friend, who had been in a coma for years like the lead of a typical Hindi serial, arose and re-entered the Indian market. This time, the plan was to stay.
Coca-Cola was back. It was the year 1993, where everyone was in the festive Dussehra mode except for a group in Agra that remained undistracted, putting together the master plan to relaunch Coca-Cola.
And it arrived with a bang! They started from Delhi & Agra by painting the towns in Red. A colorful parade of Coca-Cola trucks and delivery men drove through the streets of Agra.
They began advertising with the slogan, Always the Real Taste, signalling that Coke was back to India. They continued the cutthroat marketing with eyes on the prize, Market Leadership!
And for that, they had on the radar just one company, Thums up! Coke is all set to steal the Thunder! ⚡
Despite receiving tough competition from Coca-Cola, Thums up remained the first choice of customers. Its sale was unaffected, and all the strategies of Coca-Cola were going in vain. But this time, Coca-Cola had entered the country to stay, and they were ready to do anything to serve its purpose. So they did!
Like George Fernandes found their soft spot back in the 70’s they started to find the same for Thums up and eventually found one, The bottling plants!
Bottling plants are where soft drinks are put into bottles and distributed. These plants are a big deal when it comes to the Beverage industry. The more bottling plants a company owns, the better it is.
Out of 62 plants, Thumbs up only had 4 that were owned by them; the rest 58 were under franchises.
These franchises were already unhappy with the leadership style of Ramesh Chauhan reportedly he was the one in control over all the decisions and use to micro-manage on the other hand, judgments of manufacturers & franchisers were rarely accepted the owners of bottling plants were already on the lookout for foreign brands seeking a more liberal approach.
Coca-Cola took advantage of this and started buying those franchises & distributors, due to which the manufacturing network of Thums up was destroyed, and distribution was massively hampered.
Ramesh Chauhan remained helpless. Chauhan was practically losing one plant each week, and franchisers were switching to Cola; out of the 58 franchises, Thums up was left with less than a fraction.
With fewer plants, there was no one left to cater to Thums up's demand because there was no supply. So, what was the better option in the absence of Thums up? Obviously Coca-Cola!
This is how Coca-Cola took over all the market share Thums up had! They took advantage of the void just like Thums up did back in the 70s. Slowly Parle Thums up was left with only a handful of bottling plants and could not cater to people's demands. Soon, they began losing their market share, which directly hampered their profits.
The giant Coca-Cola was unstoppable and did everything to kill the Thums up and was winning. The father of Thums up Ramesh Chauhan tried his best to save the brand but was failing.
Ramesh was just a 22-year-old young lad who studied Mechanical Engineering in the US and joined the family business.
His elder brother passed away, and the responsibility of the family business came under his shoulders at such a young age. After a couple of years, he started building a soft drink plant from scratch, and that's how Thums up was born.
Under his leadership, Thums up enjoyed a monopoly in the market for almost 20 years; the drink was his brainchild; not only did he make it from scratch but he made sure it succeeded.
The Bottom Line
Then one day, Coca-Cola made an offer to Thums up. After hunting them down to the core, Coca-Cola wanted to buy them. By the early 90s, Chauhan accepted the defeat and surrendered. According to Chauhan, it was difficult to create a franchise model that he wished for, and things were going out of control with sheer modesty; he explains that there were "no regrets & hard feelings in selling the business".
In 1993 the very own desi, fizzy, and completely Indian Thums up was sold to Atlanta's Coca-Cola. Coca- Cola remained the market leader and guess what? The new Cola wars of Pepsi & Coca-Cola began. But as Cola always says, “I come, I see & I conquer...” Maybe they will again!
Coca-Cola & Thumsup:
Fun to read this amazing Cola history right! If you liked this one you will definitely like: When L&T was owned by Reliance Industries