Coke goes for top spot as Pepsi splits with Thai bottler
Publication Date : 25-10-2012
Coca-Cola plans to take advantage of the impending divorce between Pepsi-Cola and its Thai bottler Serm Suk by spending 200 million baht (US$6.5 million) on marketing this quarter to leapfrog Pepsi and become the undisputed leader of the 38.5-billion baht ($1.2 billion) carbonated-drink market.
Serm Suk's bottling and distribution contract with Pepsi will lapse at the beginning of next month
Pepsi-Cola recently appointed former foreign minister Surakiart Sathirathai as chairman of Pepsi-Cola (Thai) Trading in charge of formulating a strategy to cash in on the single regional market that is to be created with the implementation of the Asean Economic Community in 2015.
Jagrut Kotecha, general manager for beverages at Pepsi-Cola (Thai) Trading, will today outline Pepsi's business direction in Thailand, which is considered a strategic market as it is one of the few where it outsells Coke.
Colas represent about 75 per cent of the carbonated-drink market here, followed by flavoured drinks with 20 per cent and lemon-lime with 5 per cent. The cola segment is also the most competitive, with international brands such as Pepsi-Cola, Coca-Cola and Big Cola fighting it out for a share.
PepsiCo Inc recently said it would boost its snack and beverage business with plans for two more plants, taking its total in-vestment here since 2000 to $2.9 billion (90 billion baht). One bottling plant at the Amata City Industrial Estate in Rayong, bought from San Miguel for 2 billion baht in February, would support Pepsi-Cola drinks.
Serm Suk, a beverage firm owned by Thai Beverage (ThaiBev), is already inching towards it post-Pepsi operation by airing the first teaser ads for its "est" carbonated drink, which will hit store shelves on November 2.
As part of the 200-million baht marketing effort, the Coca-Cola system today will conduct the largest sampling campaign ever in Thailand and go on a nationwide tour to meet consumers and distribute one million bottles of Coke in a single day.
Thiti Tuangsithtanon, marketing manager of Coke, said the soda drink market was projected to increase by 11 per cent year on year in the first nine months of this year, while Coca-Cola would be able to grow its sales by 20 per cent.
"We expect the overall carbonated drink market will be on par with 2010, with 12- to 15-per-cent growth. The market was flat last year due to the massive flooding, which hit from October to the end of the year. We expect the market to grow again this year driven by positive factors, including the coming of new branded players and more investment allocated in the industry by both existing and new players," he said.
Thiti declined to reveal Coca-Cola's share of the cola drink market, saying only that the parent company had a strong ambition to beat Pepsi-Cola.
"We were able to gain 5 percentage points to 54 per cent in corporate share this year, which is the highest ever in 10 years. The increase of 5 points on an annual basis is also among the highest we have seen in this competitive carbonated-drink segment," he said.
"Having a strong alliance with local partners - Thai Nam Thip and Haad Thip - is considered as one of the factors driving our success in accessing individual consumers. They have provided us with local insight and know-how regarding consumers and the market situation," he said.
The company has also made progress in brand preference. Based on its survey, about 35 per cent of the population aged 12-49 choose Coca-Cola as their preferred brand, he added.