Did you know: Pepsi was once the 6th largest military in the world!
History
In 1979, Pepsi entered the Soviet Union for the first time. In a bid to introduce American products to Russians, the then US President Eisenhower organised an American National Exhibition in Moscow.
At the ceremony, Nixon and Soviet leader Kruschev got into a heated argument about an issue. The situation got tense, and Pepsi CEO Donald Kendall arrived on the scene to offer Kruschev a ‘Pepsi’ to calm him down.
The whole fight though was a staged marketing ploy by Pepsi to enter the Soviet market. And it did work quite well. Russian media went crazy with their coverage of how a drink had two world leaders socialising.
Pepsi ran way the slogan ‘Be sociable. Have Pepsi’ in Soviet. This was every Brand Manager’s dream- Pepsi had created a buzz in the Russian market without selling a single drink.
Years later, Russians decided they wanted to strike a deal with Pepsi to bring their products into the Soviet. There was just one problem though - Soviet currency Ruble was practically worthless outside the region at that time.
So, the Soviets decided to do cut a barter-style deal with Pepsi. In the return for the drink, they decided to offer the company what any well-meaning Russian possibly could - the Stolichnaya Vodka.
Pepsi was an instant hit in Russia. The Soviets, tired of bland government products, loved this foreign fizzy drink. By the 80s, Pepsi was selling about a billion drinks per year and had 20 bottling facilities in Russia to keep up with the demand.
By this time, the Pepsi market in Russia was close to $3 billion. This created a new problem. Pepsi didn’t want Vodka anymore. After the whole Soviet-Afghanistan debacle, the drink was as they say ‘out of fashion’.
Soviets were like “Look, we really like your drink. How about we offer you 17 submarines and other military equipment that we have lying around post the Cold War?”
And Pepsi was like “Uh….fine.”
And thus, with this haul, Pepsi became the 6th largest military in the world.
Although this didn’t last very long though, as they eventually the equipment to a Swedish scrap company. There’s not much a beverage company can do with large scale weapons.
Pepsi dominated the Russian markets till the fall of the Soviet Union in ’91. This was when Coke decided to enter the markets and is today the number one Russian drink.
Today the competition’s pretty close between the two. But one could only imagine how close it would’ve been if Pepsi decided to keep all that military equipment.
The race to deliver groceries in less than 2 hours
Business
Indian e-grocery firms are doubling down on last-mile fulfilment strategies with a promise of delivery in less than 2 hours.
The recent ad campaigns corroborate this change in trend.
Why the change?
1. Economic moat
The Indian e-grocery market is forecasted to reach a whopping USD 24 billion by 2025 - owing to accelerated internet penetration and pandemic-driven digital commerce surge.
Consequently, the e-grocery landscape is inundated with scores of companies wanting a share of this pie - incumbents (Tata, Reliance, and Amazon) and growing startups (Swiggy, Zomato, and Dunzo) alike. To survive and thrive in this hyper-competitive ecosystem, the players are looking to use their express delivery time as a competitive advantage.
2. A global phenomenon
The mania of delivering groceries within minutes is not just a hot vogue in India. Indian companies, too, are hoping to replicate this success that would eventually lead them to multi-billion valuations.
A few success stories:
What is the execution model?
Rather than point-to-point deliveries from mom-and-pop stores, e-grocers are gravitating towards the concept of ‘dark stores’.
Dark stores are tiny physical spaces stockpiled with a pre-determined inventory. Depending on demand from each zip code, e-grocers open up an optimum number of dark stores in each area. Generally, a dark store is opened up for every 2-5 km radius.
Leveraging short distances, the retailers can fulfill the order in just a span of a few minutes.
Is it sustainable?
Luring consumers with added convenience at the cost of a few extra bucks is an erstwhile marketing strategy. However, what remains to be seen is the sustainability of this model. The two probable spokes in the e-grocery wheel - cost and competition.
Economically speaking, adding dark stores to reduce the delivery time increases the cost of an order multi-fold. Eventually, when the investor in-flows wane out, the cost would be passed on to the consumer - making customer retention harder.
Possible consolidation in future
The grocery delivery market is a crowded space. The Indian telecom sector could hold a mirror to the present context.
In 2015, the telecom industry, ripe with tens of companies, indulged in a hard-fought price war (courtesy Jio).
Today just three players are standing while the rest were either bankrupt or acquired. A similar wave of consolidation may play out in the grocery market as well- with the deep-pocketed bigwigs acquiring the budding startups.
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