How Thums Up thundered past Pepsi & Coke to become a billion dollar soft drink brand
Did you know that Thums Up is the second most popular soft drink brand in India after Sprite? Despite higher promotional budgets, both Coca Cola & Pepsi brands have struggled to cope up with the homegrown thunderstorm that is Thums Up. Launched in 1977 to fill the void left by Coke’s exit from the Indian market, Thums Up at one point of time dominated the soft drink category in the country - in 1993, when Coke re-entered the Indian market, Thums Up held a whopping 85% market share. However, the story is not all roses - Thums Up has had a tumultuous four & a half decades where the brand has seen its fair share of both highs & lows. Once the pride of Indian entrepreneurship, Thums Up was relegated to the back of the shelves with drastically reduced marketing budgets. Despite the setbacks, the brand withstood the test of time and became a billion dollar soft drink brand in 2021. This is the story of how an Indian soft drink brand stole the thunder from international brands like Pepsi & Coca Cola to become a billion dollar brand!
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Under Morarji Desai’s leadership, the post-emergency Government of India launched the Foreign Exchange Regulation Act (FERA) in 1977 which stipulated that all foreign companies operating in India had to dilute their shareholding in their Indian operations to the tune of 60%. This did not sit well with Coca Cola, which was being asked to share their formula as well. In a sign of protest, the company decided to exit the Indian market altogether. This meant that the Indian soft drinks market was ripe open for the taking. Sensing a once in a lifetime opportunity, Parle, under the leadership of Ramesh Chauhan, decided to launch a slew of soft drinks for the Indian consumer. That very same year, Parle launched Thums Up, along with other iconic soft drinks such as Limca, Maaza, Citra & Gold Spot. As expected, Thums Up took the market by storm & occupied the void left by Coke. Although there were others who tried to compete with Thums Up, none was really able to provide any serious threat except Campa Cola. However, that competition fizzled out as Campa Cola started to lose momentum after the untimely demise of its founder Charanjit Singh in 1990.
With no competition in sight, Thums Up was the undisputed leader of the Indian soft drinks market. By 1993, when Coca Cola re-enter the market, Thums Up held a whopping 85% market share of the $350 million soft drinks market in India. Coca Cola now had two battles to fight - one with its arch nemesis Pepsi, which had recently entered the Indian market in 1990, and the other with the homegrown market leader, Thums Up. Realizing that a head on collision with Thums Up in the market would be a long-drawn-out battle, Coke decided to out maneuver Parle - they went after Parle’s bottlers. You see, in the soft drinks business, the bottlers are the key to success. Due to the nature of the business, the owner of a bottling franchise is also the owner of the plant and hence can choose who they work for. Coca Cola offered lucrative contracts to the 60 odd bottlers working for Parle and was soon able to turn most of them over to their side. By September 1993, it was pretty evident that Parle would lose most of its bottlers, which would be a death knell for Thums Up and its other soft drink brands.
Seeing the writing on the wall, Ramesh Chauhan decided not to prolong the battle with the global cola giant. He sold off all his soft drink brands to Coca Cola in September 1993 for $60 million. In one fell swoop, Coca Cola became the largest soft drink company in India. This is where the story takes a sharp nose-dive for Thums Up and other Parle brands acquired by Coca Cola. Although Thums Up was the market leader, Coke had no interest in further nurturing the brand. Instead, Coca Cola wanted to promote its flagship brand in India back to its former glory. The company soon began to wipe off the brands it had acquired from Parle - it discontinued Citra & Gold Spot, while drastically reducing the marketing budgets for Thums Up, Limca & Maaza. In 1995, when Coca Cola had an allocated marketing budget of INR 200 crores, the company allocated a meager INR 1.8 crore to Thums Up!
Despite this, Thums Up continued to persevere in the Indian market. Thanks to loyal customers & a crafty marketing team led by Arvind Sharma, former CEO of advertising agency Leo Burnett. The team was able to successfully utilize the limited budget & resources to re-establish Thums Up in the market. The team came up with the iconic “Taste the thunder” tagline for Thums Up that is still in use today. By 2002, Thums Up began to regain market share from both Pepsi & Coca Cola brands. Coca Cola soon realized that they were better off promoting and capitalizing on the Thums Up brand rather than trying to sabotage it. The company rolled out Thums Up Charged, its first energy drink in the Indian market, by leveraging the iconic brand. In 2021, Thums Up crossed a billion dollars in annual revenue, making it the second most popular soft drink brand in India. The brand stole the thunder from Pepsi & Coca Cola despite all the challenges it faced in its 45 year history to become a homegrown billion dollar icon in a market dominated by giants!