He helped bring Coke back to India and establish it here despite many obstacles. Former Chairman and CEO of the Coca-Cola Company Neville Isdell talks to Surajeet Das Gupta in a telephonic interview from his home in Barbados, on his new book and his impressions of those with whom he worked.
You bought out India’s “king of soft drinks” Ramesh Chauhan. Many thought he sold cheap, but he gave you a lot of trouble even after the sale. How was your relationship?
He was street-smart and a real fighter, and I enjoyed that. He had a larger-than-life image in India and the problem was that, suddenly, he was no longer the leader of the industry. What rankled with him was not money. We gave him a fair deal and he negotiated with us as well as Pepsi, like he should have been doing, but we paid him more. But not being in the spotlight was a problem for him. His brother Prakash, on the other hand, was low-profile and stayed away from the media.
There are mixed views on Jaydev Raja’s contribution to Coke, though he steered its second coming in India. Some thought Raja was not effective.
I think he did not get the credit he deserves. Many of his decisions were turned down by Douglas Daft, who was his boss, and he left. Had it not been for his clear strategy, Coke would not have been where it is today. He was clear that the Parle brands had to be built up in India and he led the process of getting all the clearances from the government, which was crucial.
Sanjay Gupta was considered a controversial CEO. What went wrong?
Sometimes you have a gut feel that a person is not right for your organisation from day one. That is what I felt about Sanjay. He was a persuasive man and aggressively pitched a Rs 5 Coke and convinced the management. I knew it was a short-term strategy to get volumes and would not be sustainable. It had an adverse impact, eroding the margins of bottlers, who in turn stopped investing, and it set Coke in India back by some years.
One of the biggest crises that Coke faced in India was the pesticides controversy, which hit your shares even internationally. You mention it in the book only in passing. Many would say you did not tackle it well. What lessons did you learn from it?
It was an industry problem, and the biggest problem was that those who were alleging that our water quality was poor were not ready to share their data with us. And it took us time to get data from credible, third-party agencies. By that time the damage was done. The attack on us was a digression from other, larger issues. The lesson that I learnt was that Coke and Pepsi took a little too long to work together to have a joint strategy to deal with an industry issue.
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Indian fizz
Coca-Cola’s effort to re-enter India was even more dramatic than its exit.
When I assumed responsibility for India, Coke’s reentry was at a very tentative stage. Coca-Cola […] had formed a joint venture with Rajan Pillai, who had gained control of Indian-based cookie-maker Britannia Biscuits. Pillai had also purchased the Asian operations of RJR Nabisco, with the help of a group of investors, including RJR Nabisco’s former CEO, F Ross Johnson, a friend of Don Keough’s.
The idea was for Pillai to move his Singapore-based snack-food plant to a new factory in India, which would also produce Coke concentrate. Celebrating the joint venture, Pillai held a lavish party at his home in Mumbai, complete with fire-eaters and snake charmers, all the top film stars, and other members of the Indian glitterati. As I watched all this, it struck me as out of sync with the conservative image of the Coca-Cola Company. I smelled a bit of a rat. It turned out that Pillai was expensing the party through the joint venture. We were paying for this outrageous entertainment.
Soon after, I started negotiating to sever our relationship with Pillai. At the same time, Pillai’s business empire was collapsing and he was indicted in Singapore for fraud. In response, he fled to India where he lived as a fugitive, moving from hotel to hotel to avoid arrest. I later ran into Pillai at the Oberoi Hotel in Delhi where, although a wanted man, he approached me as an old friend, and we exchanged warm greetings. [...]
Jay Raja, my former group marketing manager who was leading the reentry efforts on the ground in India, was at first reluctant to talk to Parle, believing it had been behind Coke’s ejection from India in the first place. Parle had also opposed the Indian government’s 1992 decision to allow Coke to return. Jay suspected that Parle was also discussing a joint venture with Pepsi. [...]
Parle was owned by two brothers, Ramesh and Prakash Chauhan, who were quickly realizing that they would not be able to effectively compete with giants Coke and Pepsi. [...]
Prakash was willing to sell but his older brother Ramesh had cold feet, reluctant to relinquish the title of India’s soft drink king; his picture frequently graced the cover of magazines. Ramesh finally relented, but not happily. He and his wife sobbed at the contract signing in Atlanta. [...]
The headaches were well worth it, although it took time. Coke’s sales volume in India jumped 50 percent in the first two years and captured almost two-thirds of the market. Despite that success, Jay Raja resigned from the company in 1995, after being hammered for two years from both sides: Indian media accused him of trying to kill a national icon, Thums Up, to promote Coke and Fanta, while Coca-Cola executives at North Avenue, including Douglas Daft who was then in charge of Asia, made the opposite charge. Sergio Zyman, the father of New Coke who resigned after the 1985 debacle and was rehired in 1993 as the company’s chief marketing officer, was, in fact, lukewarm about Thums Up.
Excerpted with permission from Pan Macmillan India
INSIDE COCA-COLA
A CEO’s Life Story of Building the World’s Most Popular Brand
Author: Neville Isdell with David Beasley
Publisher: Pan Macmillan
Pages: 320
Price: Rs 499