Coca-Cola, Pepsi and KiK from Elephant House, owned by the John Keells Group, are most likely to be involved in a major battle of the ‘colas’ pumping in huge investments into the product and brand with demand seen rising sharply for the Cricket World Cup to be played in the Indian sub-continent starting on February 17 and ending with the final on April 2.
“It’s good to have competition and yes, it will be a battle for the colas with Pepsi and KiK Cola raising the stakes. Consumption is bound to rise with the World Cup cricket,” Patrick Pech, Country Manager, Coca-Cola Beverages Sri Lanka Ltd told the Business Times in an interview detailing the company’s plans for this year and its performance in 2010. March –April are the company’s peak months and coupled with the World Cup, consumption is expected to rise sharply.
Earlier this week, KiK Cola revealed that its new drink reached over 1 million litres in sales in December alone, being sold in over 60,000 outlets, and being in the market so far for only around six weeks. "We are happy to say the consumers have embraced this brand," Jit Gunaratna, President Consumer Foods JKH (John Keells) was quoted as saying to reporters. The new product hit the stores in first week December.
Pepsi which has exclusive beverage rights at the World Cup, in the meantime re-launched its product in end December under new owners after another local group sold its rights, to being the Sri Lankan bottler, to India-based Varun Beverages. The main focus of the new campaign is on the World Cup and on its fans. Country Manager for PepsiCo Sri Lanka, Kunal Sharma has said the company sees the cricket tournament as a huge opportunity, and that they have many exciting plans ahead this year.
The new competition sees Coca-Cola Sri Lanka putting in an extra $4 million into the brand this year which is part of the $50 million Coke plans to spend over the next three years on brand support, investment on bottles and crates, plant equipment, capacity expansion, etc.
However a disappointing feature in the last quarter of 2010 was that heavy rain saw consumption fall while another worrying factor is the current cold spell and low temperatures that have affected Colombo and the rest of the country. “When it rains, people stay at home and there is no (serious) habit of drinking beverages at home. Soft drinks (beverages) are generally consumed in public places (or on the go),” he said, adding; “since beverages is an iced drink, it’s preferred during warmer periods”.
January to December 2010 consumption grew by 10% from 2009 while revenue during the year rose by 35% to $3.5 million (before tax). “We did not have any price hikes while revenue benefited from reduced cess on sugar in November 2009, falling interest rates and cutting spending on logistics and transport. Also there were big savings through energy efficiencies.”
Coke expects 15% growth this year. Quoting figures from research data, Mr Pech said the total market here for all beverages is around 150 million litres annually. Of this 42 - 43% or some 85 % is shared (equally) by both Coke and Elephant House (all its beverages). Pepsi has a 10% stake while the rest (4-5%) comes from other smaller beverage firms like Sha Cola and My Cola. “The smaller colas and their market share will be affected by the battle amongst the top three. This is always the case when the giants battle,” he added.
Coke is launching a new campaign to support the brand but is restricted in using brand ambassador and cricketer Mahela Jayawardena in any World Cup-related promotion as rival Pepsi has exclusive rights as the tournament’s main sponsor. “That’s not an issue. Competition is good as one tends to relax during other times,” he said.
The company, with a bottling plant at Biyagama, is aiming to expand production to increase capacity and is hoping for a ‘good few months’. “We need to take a decision on replacing the machinery to a new one for expansion by June/July as it takes nine months for installation and such an event should be completed by March 2012. All this will depend on the success of the next few months,” he said.
|
E-mail
