Cola wars have just started

Actress Katrina Kaif launches PepsiCo's new 'Mango Slice' in New Delhi on Thursday

Whats new about Mango slice? Nothing but a strategy to remind people that its summer, let the drinks party begin!!

I found the above picture of Katrina Kaif in the outlook business website. Since I have been reading about the history of the coca cola company, I got a little intrigued to realize that the summers are on, and the cola wars have just begun.

Lets look at the product portfolio of the coca cola company and pepsico holdings in India.

Pepsico	Coca Cola India
Pepsi	Coke / Thums-up
7 up / Mountain Dew	Sprite
Mirinda Orange	Fanta
Mirinda Lemon	Limca
Slice	Maaza
Tropicana
Gatorade
Aqua fina	Kinley
Duke’s soda / Lehar Evervess
Lays
Kurkure
Cheetos
	Minute Maid

From the above table, the one-to-one competition of the major brands is evident. In spite of this, coca cola chose to stay away from the not-so popular brands, and has not ventured outside the beverage segment.

It may be seen that Pepsico India might be subjected to greater attention, since its CEO is an Indian.

Every year, the two giants come up with ways to persuade the masses to but their drinks. There is immense pressure on the bottlers and the retailers, who have to stock products of both the houses.

Pepsi got a headstart in India by virtue of its early entry. It may be noted that Coke was asked to leave on 1977 due to political pressure.

The recent league matches (or the gully muhalla matches, as I would like to call) has also seen their share of the cola wars. As per a report in the Hindu business line, coca cola would be keeping Pepsi off screen during the IPL matches.

Currently, Pepsico is ahead of Coke in India because of its diversity of products, as per this report in the Economic times

As per the advertising house Lintas, PepsiCo India saw a decline of Rs 27 crore in 2007 and had total TV and print spends of Rs 131 crore.

The flavors of this season are exemplified in the business standard article. As per them, Coca-Cola India and PepsiCo are likely to spend anywhere Rs 50-70 crore on each brand this season.

India remains a big market for both the giants, because more than half of its population is below 25.

I remember reading somewhere that the cost of making a bottle of cola is not more than 50p. adding the packaging, marketing and supply chain costs, it goes up over 20 times in the retail market. But the prices have not fallen. Recently, there has been more popularity of the 500 ml carry bottles (which claim they are giving 20% extra, or 600 ml) and the new shape cans since the youngistan believes in things that are often unheard of.

Ramdev Babaji’s tirade against the colas as a toilet cleaner has its own takers. But his target segment is the adult above 40. he does not find many takers in the age group where cola dreams are made up of.

I am not in favor of such aerated drinks, because of their free calorific value. But these brands represent the great American dream, and capitalism is coming to India in a big way.

Sport or Entertainment?

Sport: (noun) an activity involving physical exertion and skill in which an individual or team competes against another or others.

Sport is revered for its skill, competitiveness and sportsmanship. The phrase “be a sport” urges the listener to take the situation in a positive sense.

This sport is often seen as a mode of entertainment. WWE, telecast on the sports channels (and off late, on aaj tak as well, thanks to Khali hai bali phrase) has the word “entertainment” in its name. That’s because people want to be entertained, even in the name of sport.

We Indians are crazy about cricket. I have seen the cola giants cashing on the cricket matches, irrespective of who wins. An India Pakistan match can even vacate the traffic from the oft crowded roads. It is this kind of popularity that takes cricket from a sport to a new genre of entertainment.

We had a first class cricket, where players of both sides played two innings each in 5 days, demonstrating their dexterity in the game. Things changed when it was decided that 5 days is too long a period, people want results fast. And a 1 day was born. It became hugely popular, 50 over a side matches got over in a day. It was a full day entertainment.

In 2007, we came to know of 20-20 cricket. The runs came faster and the game got over in two hours. Who cares about the skill or the style? Runs are to be made by all means possible. And people loved it. It was all the more thrilling because India had something to cheer about (the first 20-20 world up champions)

I hope the overs won’t get any lesser. Till now, we have been enjoying matches between countries, states and districts. The quest for more entertainment brought a plethora of leagues into the cricket parlance. We had the IPL who invested billions to “buy” players, irrespective of where they come from. There is no pride for the country, but for the team. Cricket is slowly moving towards a football club kind of a framework.

The franchisees have paid the players and they need to pay the stadium for each match, besides the marketing expenses. Their revenues come from advertising only. But the big question is, will it sustain? Will people flock to grounds? Only time will tell.

After IPL, there is the ICL with another set of teams. So many teams will only add to the confusion of the Indian masses looking for entertainment. I find such cricket as galli muhalla cricket. The recent Edelweiss 20-20 matches didn’t seem to find many takers (I found the stadiums empty).

SRK called it an investment, and emphasized the fact that he did not sponsor a hockey league because it is not profitable enough (though he was open to convert more sports into entertainment).

We do not know if SRK or Dada charm will have an effect, but at least the players are laughing their way to the bank


http://www.financialexpress.com/news/IPL-franchisees-set-to-turn-cricket-into-entertainment/275723/

Highlights of 2008 budget

Highlights of the budget

For income upto Rs 1,50,000 tax liability will be nil, Rs 1,50,000-Rs 3,00,000 tax liability 10% , from Rs 3-5 lakh 20%; 5 lakh upwards 30%

Senior citizens threshold tax limit increased from Rs 1,95,000 to Rs 2,25,000

Threshold tax exemption limit increased from Rs 1,45,000 to Rs 1,80,000 for women

Threshold tax limit of exemption increased from Rs 1,10,000 to Rs 1,50,000 for men

15% tax for short term capital gains Hospitals in Tier 2, Tier 3 cities get 5 year tax holiday Pharma goods excise duty cut to 8% Excise on packaged software to go up from 8% to 12% No excise duty on refrigerating equipments Anti-Aids drug gets excise duty exemption Custom duty for phosphoric acid custom duty reduced to 5% Custom duty on some bulk drugs cut form 10% to 5% Custom duty on steel scrapped Defence allocation up by 10% from Rs 96,000 cr to Rs 1,56,000 cr Textile parks get Rs 450 crore provision SIDBI gets Rs 2,000 cr for two funds NABARD gets Rs 5,000 cr fund for refinancing Spending on NREGS seen at Rs 160 bn SIDBI gets Rs 2,000 cr for two funds NABARD gets Rs 5,000 cr fund for refinancing Spending on NREGS seen at Rs 160 bn Health spending to rise 15 per cent Education spending to rise 20 per cent National housing bank gets Rs 1,200 cr for refinancing Power sector to get national fund for transmission, distribution reforms NHDP allocation rises to Rs 12,966 cr from Rs 10,866 cr Govt to cost Rs 50,000 cr on farm loan waiving Agri loans restructured in 2004-06 under special packages to be waived Tea Research association gets Rs 20 cr Micro irrigation scheme gets Rs 500 cr Agriculture share in total investment up 16% from 10.2% Allocation for ministry of minorities doubled to Rs 1,000 cr Schemes for woman to get Rs 11,460 cr this fiscal Child related schemes to get Rs 33,434 cr 288 branches of public sector banks to be opened in 2008 National Minority Development and Finance Corp to get Rs 75 cr Thanks Tips4Trade Team www.tips4trade.com

The railway budget

The Laloo ministry did manage to bring out the railways from the red to Rs 25000 crore over the last 4 years. Laudable it may seem, but there are still opportunities for improvement.

I read this article on rediff, the author made quite a few interesting comments on the budget.

India has amongst the lowest rail fares in the world. An Indian consumer's fare is about 50 per cent of what his Chinese counterpart pays. Well, we belong to a poor country, and a democracy is not expected to raise prices, with general elections next year

In sharp contrast, Indian Railway's cargo fares are among the highest. Even after the 5 per cent reduction announced by Lalu, cargo fares in India are costlier than China's, by at least 25 per cent.

Further, only about 35 to 40 per cent of all cargo traffic in India goes through the Railways. Railways' share has been falling consistently over the years.

In general, it takes lesser time for cargo to be transported over the train (discounting the delay at the yard) than by road. In addition, the road infrastructure is not too adequate for high speed traffic (and we do not even have high speed trailers!). So a reduction in cargo fares coupled with smoother services would only make railways more amiable to businesses. It would reduce costs, lower pollution levels and increase railways revenue.

I haven’t traveled in a train for quite some time now, but I wonder what advantage will a 4% reduction in AC-II tier fares will provide. If my fare to Delhi is some Rs 2000, a 4% reduction will translate to only Rs 80. I don’t see any reason for someone opting for the AC II tier to gain the meager amount (much more is spent on the way to the railway station).

We have a state monopoly when it comes to railways. If railways were partially privatized or a permission were given for FDI, it would only improve the quality of services (both on and off the tracks).

Kya Aap Panchvi Pass Se Tez Hai

They say greed and fear are the drivers of the stock market. The two aspects of human psyche coupled with benevolent sentiments and pluralistic attitudes only lead to further liquidity, the m-commerce way.

The rediff article talks about Rs 18 crore being made from customers through the much hyped SRK featuring “kya aap panchvi pass se tez hain?” Entertainment aside, this sitcom will give viewers the opportunity to bid for places and try their luck. Somebody calls it gambling, but so what? We all take risks in so myriad ways.

The surge of mobile phones has allowed the entertainment media to make money. The so many reality shows that ask for your “votes”, which you can cast through sms to 5 digit numbers. Contestants fighting against each other result in people (and their sms’s) fighting for the top spot in this seemingly democratic set up.

And people don’t mind it. They treat it as a small price to pay for the entertainment. And irrespective of who wins the game (can range between ages 6 to 80), the telecom industry is having a good time with their value added services raking in the bulk of the revenue.

Fiscal favors

I came across this article in the Telegraph a couple of days back, and I was enlightened with some understanding of the economic forces in the present globalized world.

The Indian economy is no longer immune to the world economic changes. The recent fears of economic slowdown in the US has tumbled the stock markets, with foreign investors taking away their pie before its too late. And this has affected domestic growth rate as well.

India has moved on from a fixed exchange rate regime to a flexible rate, thereby allowing INR to fluctuate with the demand and supply in the forex market. In addition, the existence of capital account convertibility (which allows freer movement of capital in and out of the economy) gives India the capability to compete in the world.

The author opines that the existence of the above (capital account convertibility and flexible currency rate regime) renders the fiscal policy ineffective.

A chain of events occur due to the favorable (or unfavorable) fiscal policy. Higher revenue spending on growth will lead to greater outputs and higher incomes. This will translate to higher demand for commodities, and subsequently higher demand for loanable funds and resulting in higher commodity prices.

Rising prices imply higher inflation. Now this inflation hurts the poor and benefits the rich. This is because of higher incomes of the rich, or because the rich are the commodity suppliers. The poor, on the other hand cannot demand higher income, but are faced with inflationary pressures.

To keep inflation in check, the government raises the interest rates. In the presence of CAC, there is a higher capital inflow in the domestic economy, leading to accentuating stock markets. The demand for domestic currency also rises because of flexible currency. This makes foreign items cheaper for the domestic market and domestic commodities more expensive to foreigners. The demand for locally made products takes a hit, and so does exports.

The recent fall in the bellwether index is a fallout of expectations: FIIs expected a reduction in the interest rates in India after US economy reduced theirs. But the RBI governor has not shown any intention to reduce the rates. So, foreign investors are expected to be back soon.

But what does government intend to do? They will have to keep an eye on the forthcoming elections. The recent hike in fuel prices, thought long awaited has already seen sections railing against the government for the pragmatic move.

The author expects the larger populace to be pleased with “fiscal favors”, and issues like exchange rates and CAC will take a back seat.

The impact of the missing fowl

The importance of something is realized only in its absence. The chicken is a classic description of the food that has somehow gone out of our lives.

The bird flu with its sordid impact has wiped out the chicken from our tastebuds, dining tables, kitchens and even the markets. In spite of the advisory of cooking the meat for 70+ degrees (which every human being cooks at), the state government is chickened to allow consumption. And the result? I haven’t tasted it for over a month now.

Now to the economics behind the whole safeguard. The government ordered culling of fowl in all the infected districts, and allotted 700 crore for the initiative. As expected, poultry farmers did not get their share, and did their best to hamper the operations. With the bird flu reaching the adjoining districts of Kolkata, all Buddhadeb government could do was to make the sale of chicken and eggs illegal.

Before this rule came into effect, the prices had dropped from a high of Rs 80 or 90 to Rs 35, thanks to lowering demand. And after the ban on the sale, traders will have to make do with selling illegally (at a lower price) or by sharing among friends.

This has increased the demand on its substitutes: mutton and paneer. Prices of these items have risen 10-15% in the past 2 months. The marriage season also saw costs going up; since mutton is much more expensive. Restaurants are not serving chicken any more.

Over all, the bird flu has caused quite havoc in the food market.

What else can one do but to wait for this phase to get over? But once it does and the fowls reach the market, the prices will only be 50% higher than the pre virus stages. And the prices of its substitutes will fall immediately.

At least we will have something to look up to!!

Travel - Valentine day special

Rediff.com takes us to some of the romantic spots and call it the valentine day special.

No harm in me calling the same!

http://specials.rediff.com/getahead/2008/feb/08sld1.htm

Goel vs Patni

http://www.businessweek.com/magazine/content/08_06/b4070057782750.htm

This article shows the plight of the knowledge workers in the land of opportunities.

A couple of days back a friend forwarded me this link. I could then understand its relevance. I know a few of my friends who have been with Patni and at the client site at Bloomington, IL; but didn't have an idea how bad things were out there.

US is known to be a land of opportunities, though it is observed to be losing its sheen, thanks to the recent economic slow down. But it used to score way above India a few years ago, when emerging markets were struggling to keep up. In this circumstance, it gave the IT firm opportunities to exploit those looking for a successful career.

Why was this delay in bring the story out? And what is the plight of the IT junta at onsite? Only ones who have been or are at onsite can say.