Coca-Cola, which sold 10 billion cases of soft drinks in 1992, now finds itself asking, where will sales of the next 10 billion cases come from? The answer lies overseas, where income levels and appetites for Western products are at an all time high.
Often, the company that gets into a foreign market earliest dominates that country's market. Coke patriarch Robert Woodruff realized this and unleashed a brilliant ploy to make Coke the early bird in many of the major foreign markets. At the height of World War II, Woodruff proclaimed, "Wherever American boys were fighting, they'd be able to get a Coke." By the time Pepsi tried to make its first international pitch in the 1950s, Coke had established its brand name along with a powerful distribution network.
During the last 40 years, many new markets have emerged. In order to tap into these opportunities, both coke and Pepsi have attempted to find ways to cut through the red tape that thwarts their efforts to conduct business in these new regions.
One key maneuver in the soda wars occurred in 1972, when Pepsi signed an agreement with the Soviet Union that made it the first Western product to be sold to consumers in Russia. This landmark agreement gave Pepsi the upper hand. At present, Pepsi has 23 plants in the former Soviet Union and is the leader in the soft-drink industry in Russia. It outsells Coca-Cola by a ratio of 6 to 1 and is seen there as a local brand, similar to Cokes homegrown reputation in Japan.
However, Pepsi has also encountered some obstacles. An expected increase in brand loyalty for Pepsi subsequent to its advertising blitz in Russia has not materialized; even though Pepsi produced commercials tailored to the Russian market and sponsored televised concerts.
Some analysts believe that Pepsis domination of the Russian market has more to do with pricing. While Pepsi sells for 250 Rubles (about 25 cents) a bottle,
Coca-Cola sells for 450 Rubles. Likewise, Pepsi sells their 2 liter economy bottle for 1,300 Rubles, while Coca-Colas 1.5 liters is marketed at 1,800 rubles. On the other hand, Coca-Cola only made its first inroads into Russia 2 years ago. What's more, although Coca-Cola's bottle and label give it a high-class image,
Russians do not perceive Coca-Cola as a premium brand in the Russian market. Consequently, it has so far been unable to capture a market share.
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