The New Cola Wars

Presented by: Atiqah Nadwa Binti Mat Shohor (2011105771) Azlinda Binti Harun (2011149521) Jimmy Shanley Bin Norjahan Saleh (2011155953) Muhamad Shafiq Bin Muhamad Arif (2011972977) Syazwani Arbaiyah Binti Mohd Shahir (2011738041)

Introduction Background of

Started in 1886 by John Pemberton (creator), Asa Griggs Candler (business founder).

Background : Pharmaceutical and sales.

Initially the drink was known as Pemberton’s French Wine of Cola.

The first drink sold was priced at 5 cents per glass and only 9 glasses were sold per day.

The drinks contained alcohol and later replaced with sugar to make the taste more appealing

to drink.

The drink was renamed to Coca-Cola by Pemberton’s bookkeeper.

Pemberton died in 1888 and never saw his drink taken to the masses.

Asa Griggs Candler bought over the rights of the drinks.

In 1892, the Coca-Cola company was officially born.

SYNOPSIS OF THE CASE

• For many years, the world has seen the intense battle between two powerful global brand, Coke and Pepsi.

• Recently, many private labels newcomers with unique histories and international ambitions have emerged to challenge the status quo.

Background

Launched in France in 2002 by a Tunisian-born businessman.

Goal: To make Mecca Cola the cola of choice for Muslims worldwide and to combat America’s imperialism by providing a substitute for American products.

Mecca Cola’s packaging was similar to Coke’s.

Background

Founders of the company were cousins, Zahida Parveen and Zafer Iqbal and launched in late 2002.

Slogan : “Qibla Cola, liberate your taste” (Qibla means “direction” in Arabic)

The company announced that 10% of profits from every two-liter bottle sold would go to the

Muslim charity Islamic Aid, which specializes in establishing humanitarian projects in some of the world's most deprived communities.

SITUATION IN EUROPE

Mecca Cola entered the UK market with the goal of capturing 5% of the world’s 10th largest cola market.

Distribution of Mecca Cola was through small shops in communities where 1.5 mil Muslim Britains were concentrated.

Qibla Cola was launched in Britain in late 2002 and has plans to enter the U.S market.

The Qibla Cola Company called for a boycott of all American brands to protest the US-led war in Iraq.

They target students and young people and proclaimed that people should switch to brands that were independent of governments and their unjust policies.

Coca-Cola invested in smoothie maker, Innocent.

Innocent became Britain’s top brands due to its social commitment and ethical marketing.

Innocent dedicated 10% of its profit to charity and use recycled bottles.

Background

Founded in 1954 as the Iranian partner of Pepsi until their contract was terminated after the 1979 Islamic Revolution.

Muslim consumers boycotted American products to protest support of Israel in the ongoing Middle East conflict.

As a result, Zam Zam Cola was bombarded with orders from neighbouring Arab

countries.

SITUATION IN THE MIDDLE EAST

Coca-Cola had already encountered a competitor that positioned itself as an alternative to Coke: Zam Zam Cola in Iran and Saudi Arabia.

Coca-Cola signed a franchised with the National Beverage Company to bottle and distribute Coke throughout the West Bank and Gaza Strip.

COMPANY BACKGROUND

Founded in 1988 by the Ananos-Jeri Family in Ayacucho, Peru.

Rebels from the Shining Path terrorist group destroyed farms and routinely hijacked Coca-Cola’s trucks.

The family decided to produce their own cola and sell it locally.

Their cola was sold at an extremely low price compared to Coke and Pepsi because they cut costs on advertising.

Products: Real Kola & Big Cola

Operates in 22 countries; Brazil, Costa Rica, Ecuador, India, Indonesia, Thailand, Venezuela and Vietnam.

SITUATION IN LATIN AMERICA

Ajegroup’s Kola Real captured 22% of the Peruvian market, 16% of the Ecuador market and 17% of the Venezuelan market due to its extremely low price.

This forced Coca-Cola to cut their prices as well.

11% of Coca-Cola’s global profits came from Mexico and their position was threatened when Ajegroup entered the Mexican market.

Ajegroup set it prices at 20-50% below its competitors’ prices resulting a rapid drop in sales for Coca-Cola and Pepsi.

SITUATION IN LATIN AMERICA contd

Ajegroup introduced big bottles at very low price (Big Cola).

Relied on salespeople to reach the smaller stores in Mexico that accounted 75% of its sales.

Some distributors declined the new cola due to Coke threatening to pull their products from the shelves.

Ruling by Mexico’s antitrust board had ordered Coke to stop abusing its market power over distributors.

As a result, many distributors became aware that they had a choice about what they are selling.

However, Coke could buy loyalty by offering free refrigerators and buying life-insurance policies for its small retailers.

Coke also sends employees to visit stores to help with stocking and display.

In the contrary, Ajegroup focused on cutting costs. Their distribution was outsourced to third parties who delivered in rundown trucks.

3 years after entering the Mexican market, Big Cola had grabbed 7% market share and represented 45% of the Ajegroup’s consolidated sales.

Discussion Question

Which is you think the bigger threat to Coca Cola brands like Qibla Cola and Mecca Cola or the Ajegroup? Why?

Bigger threat to

Is the

Produced in Hispanic countries (Peru). Their headquarter located in Spain.

Estimated 500 mil population of the world are from Hispanic countries. Around 360 mil Hispanics live in Hispanic America and 40 mil live in Spain. Around 34 mill live in United States and the rest in Canada, Morocco, Philippines and Brazil.

Sponsored 3 Barcelona football players. Indirectly the teams performed and made Real Kola much more popular in the Hispanic countries.

Attractive product

Discussion Question

What are the strengths and weaknesses of Qibla and Mecca Cola compared to Coca Cola?

Strengths and Weaknesses

STRENGTHS WEAKNESSESStrong financial backup of the UAE based organization.

Brand name representing the Islamic values only which could not be effective in attracting non-Muslims.

Inspiring Brand name in the Pakistani environment.

Fewer plants than competitors in the start.

Product quality is competitive much better than the past.

As a new comer Mecca Cola is yet to develop mutually beneficial relationships with suppliers and distributors.

Low price as compared to competitors.  Heavy promotional budgets on teasers, awareness and persuasion.

 

Highly available in rural areas and urban areas.

 

Number of variants.     

Strengths And Weaknesses

Strengths Weaknesses

Their bottle (shown in the image on the left) markets their aim for social

responsibility by displaying a parody of nutritional information.

They’re not very transparent as to which charities they donate to. One has to go to their website to find information about

the charities and projects they’ve worked with but no where does it list the criteria used to choose such initiatives.

The appeal for Qibla cola is gaining global momentum. Consumers

appreciate the way Qibla cola tastes and looks whilst knowing that their money

will contribute to worthy causes.

Collapse because of bottling and distribution problem

  Concentrates on Muslim market (non muslim refuse to buy)

  This February, Qibla announced it was expanding into Libya. But then the company's public communications

department suddenly lost its confidence.

Strengths and Weaknesses

STRENGTHS WEAKNESSES

The best global brand in the world in terms of value ($77,839 billion).

Significant focus on carbonated drinks.

World’s largest market share in beverage.

Undiversified product portfolio.

Most extensive beverage distribution Channel.

High debt level due to acquisitions.

Customer loyalty. Negative publicity.

Bargaining power over suppliers. Brand failures or many brands with insignificant amount of revenues.

Corporate social responsibility.  

Discussion Question

Why has the new cola launched by the Ajegroup been so successful? Do you think this cola cloud successfully expand

outside Latin America? Why or why not?

The first bottle of Kola Real was produce in a family residence in a city of Ayacucho, Peru during the 1980s.

The area was so ravaged by terrorist conflict that coca cola and Pepsi had pulled out of doing business there.

This withdrawal created a gap in the local market just begging to be filled by a home grown operation.

Due to the absence of coca cola products in the market, Ajegroup was successfully tapping the gap in the market.

They can tap the market outside the Latin America especially in Muslim countries by having the Halal certificate. Because beside

Coca Cola, their rivals are from Muslim-owned cola brand (Mecca Cola and ZamZam Cola)

Discussion Question

Evaluate Coca Cola’s response to Ajegroup. What suggestions would you give Coca Cola?

Coke abuse the market power over distributors at Mexico

Coke offers free refrigerators to chill cokes

Buying its small retailers life-insurance policies.

Coke employees were constantly visiting stores to help with stocking and display

Evaluation

Coke doing the right thing in order to sustain themselves as a global brand and a major player in the soft drink industry.

Suggestion

Aggressive promotion

Assign local celebrities as ambassadors (eg. Footballers)

New slim bottle design similar to a canned Milo

Concentrates on concept store such as being done by apple (sells home appliances, clothing lines)