Coke Vs. Pepsi

Coke and Pepsi in Russia: In 1972, Pepsi signed an agreement with the Soviet Union which made it the first Western product to be sold to consumers in Russia. This was a landmark agreement and gave Pepsi the first-mover advantage. Presently, Pepsi has 23 plants in the former Soviet Union and is the leader in the soft-drink industry in Russia. Pepsi outsells Coca-Cola by 6 to 1 and is seen as a local brand. Also, Pepsi must counter trade its concentrate with Russia's Stolichnaya vodka since rubles are not tradable on the world market. However, Pepsi has also had some problems. There has not been an increase in brand loyalty for Pepsi since its advertising blitz in Russia, even though it has produced commercials tailored to the Russian market and has sponsored television concerts. On the positive side, Pepsi may be leading Coca-Cola due to the big difference in price between the two colas. While Pepsi sells for Rb250 (25 cents), Coca-Cola sells for Rb450. For the economy size, Pepsi sells 2 liters for Rb1,300, but Coca-Cola sells 1.5 liters for Rb1,800. Coca-Cola, on the other hand, only moved into Russia 2 years ago and is manufactured locally in Moscow and St. Petersburg under a license. Despite investing $85 million in these two bottling plants, they do not perceive Coca-Cola as a premium brand in the Russian market. Moreover, they see it as a foreign brand in Russia. Lastly, while Coca-Cola's bottle and label give it a high-class image, it is unable to capture market share. Coke and Pepsi in Poland: Poland, with a population of 38 million people, is the biggest consumer market in central and eastern Europe. Coca-Cola is closing in on Pepsi's lead in this country with 1992 sales of 19.5 million cases versus Pepsi's sales of 26.5 million cases. The main problems in this area are the centralized economy, the lack of modern production facilities, a non-convertible local currency, and poor distribution. However, since the zloty is now convertible, Coca-Cola realizes the growth potential in Poland. After Fiat, Coca-Cola is now the second biggest investor in Poland. Coca-Cola has developed an investment plan which includes direct investment and joint ventures/investments with European bottling partners. Its investments may exceed $250 million, and it has completed the infrastructure building. Coca-Cola has divided Poland into 8 regions with strategic sites in each of these areas. Moreover, it has organized a distribution network to make sure its products are widely available. This distribution network, which Coca-Cola has spent a lot of money organizing, is extremely important to challenge Pepsi's market share and to maintain a high level of customer service. Also, Coca-Cola, like Pepsi, signed counter trade agreements with Poland. Both trade their concentrate for Polish beer. All of this has helped Coca-Cola to close in on Pepsi's lead in Poland. Conclusion on Eastern Europe: Both Coca-Cola and Pepsi are trying to have their colas available in as many locations in Eastern Europe, but at a cost which consumers would be willing to pay. The concepts which are becoming more important in Eastern Europe include color, product attractiveness visibility, and display quality. In addition, availability (meeting local demand by increasing production locally), acceptability (building brand equity), and afford ability (pricing higher than local brands, but adapting to local conditions) are the key factors for Eastern Europe. Both companies hope that their western images and brand products will help to boost their sales. Coca-Cola has a universal message and campaign since it feels that Eastern Europe is part of the world and should not be treated differently. Currently, it is difficult to say who is winning the cola wars since the data from the relatively new market research firms focusses on major cities. Pepsi had a commanding 4 to 1 lead in 1992 in the former Soviet Union. Without this area, Coca-Cola has a 17% share versus Pepsi's 12% share in the soft drink industry. While both companies have been in Eastern Europe for many years, the main task now is to develop the market. Coca-Cola and Pepsi are in a dogfight, but both will end up as winners. In the end, the ultimate winner will be the Eastern Europeans who will have access to some of the world's best soft drinks. Coke and Pepsi in Mexico: The Mexican government recently freed the Mexican soft drink market from nearly 40 years of price controls in return for a commitment from bottling companies to invest nearly $4.5 billion and create nearly 55,000 jobs over the next 7 years. Naturally, Mexico has become another battleground in the international cola wars. In Mexico, Coca-Cola and Pepsi command 50% and 21% of the market respectively. The cola war is especially hot here because the per capita consumption of Coca-Cola and Pepsi exceeds that of the United States (Murphy, 6). Mexico is the only soft-drink market in the world that can make this claim. The face off in Mexico is between Gemex, the largest Pepsi bottler outside the United States, and Femsa, the beer and soft drink company that owns the largest Coca-Cola franchise in the world. Femsa, however, may be at a disadvantage. Despite being part of the conglomerate Grupo Vista, Femsa lacks financial punch because it plays only a small part in the conglomerate's overall interests. The challenge in Mexico is to win market share through distribution efficiency (Murphy, 6). With this in mind, each company is undertaking strategic efforts designed to bolster their shares of the Mexican market. Pepsi is moving in on the Coke-dominated Yucatan peninsula while Femsa, the Coca-Cola franchisee, is planning to invest $600 million more for 3 new Coca-Cola plants next door to Gemex's Mexico City facilities. The parent companies have joined the battles as well. Coca-Cola has made a $3 billion long-term commitment to the Mexican market, and Pepsi has countered with a $750 million investment of its own. Coke and Pepsi in China: Coca-Cola originally entered China in 1927, but left in 1949 when the Communists took over the country. In 1979, it returned with a shipment of 30,000 cases from Hong Kong. Pepsi, which only entered China in 1982, is trying to be the leading soft-drink producer in China by the year 2000. Even though Coca-Cola's head start in China has given it an edge, there is plenty of room in the country for both companies. Currently, Coca-Cola and Pepsi control 15% and 7% of the Chinese soft-drink market respectively. The Chinese market presents unique problems. For example, 2,800 local soft-drink bottlers, many of whom are state-owned, control nearly 75% of the Chinese market. Those bottlers located in remote areas have virtual monopolies (The Economist, 67). The battle for China will take place in the interior regions. These areas are unpenetrated as most of the foreign soft-drink producers have set up in the booming coastal

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