Reverse Consumer Preference from Global Brands to Local Brands in the Soft Drink Industry

Abstract

India as a nation is still being exposed to global brands in the soft drinks industry though multinational players have had a good hold on the market for the past two decades. While Indian consumers are still experiencing benefits of globalization in the last few years, a new trend has emerged where these consumers are showing reverse preference to local brands as well. Reverse consumer preference does not imply rejection of global brands or acceptance of local brands alone. However, this does imply that there is a new love or loyalty being displayed towards a local brand. This phenomenon is being supported by the fact that local players are reporting higher growth rates compared to global giants in the soft drink market. Strong affinity that a consumer displays towards the culturally rooted flavors is not affected by exposure to wide array of global brands or inducement through promotion. That local brands are getting more attention could be on the account of two factors. Either local brands with global flavors are coming up displacing global brands or the preference of people towards local flavors are being capitalized upon by local suppliers which global players are unable to match. The implications of such a distinction are important. If the former is true, what is at play is some form of reverse engineering on the product that local players are able to undertake outwitting the global player. If the latter is true it is an indication that global players are providing some form of demonstration effects to the local counterparts in distribution, promotion etc. but with different flavors altogether. What this would mean is that in the former case there is brand substitution whereas in the latter case there is flavor substitution. Both these phenomena could also be occurring simultaneously.