Home Brands Cola War: Bigi topples Big Cola, dominates S/West soft-drinks market

Cola War: Bigi topples Big Cola, dominates S/West soft-drinks market

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Bigi Cola, a product of an indigenous company, Rite Foods Limited – launched in December 2007 as a subsidiary of the Ess-Ay Holdings Limited – is the emerging leader of the carbonated drinks market in the South West region. It has displaced not just Ajeast Nigeria’s Big Cola which it essentially mimicked to break into the market, but also products of other industrial giants, such as Coca-Cola and Pepsi, particularly in Lagos and Ogun, a survey by BusinessHallmark has shown.

Rite Food had officially come into the market in 2008 with its Rite Sausage Roll. It would proceed to introduce varieties of other sausage rolls with which it penetrated the market. And in 2016, a year after Ajeast launched its Big Cola brand the company launched its own Bigi Cola. With already existing distribution channels, it pushed aggressively into the market, taking advantage of Ajeast Forex challenges which affected production to become the new market leader in the region.

While Coca-Cola, Sprite, Fanta as well as Pepsi and other products of 7UP bottling company remain popular in Eastern Nigeria where such newer products like Big Cola, Bigi Cola, RCQ – a product of Strongpack Limited for First Bev – have not made much inroad, Bigi Cola has become the dominant brand in the zone followed by Pepsi, while still making increasing inroads into parts of South South and North Central. Coca-Cola, which once used to be the dominant brand in the segment seems to be struggling, the once market rave Big Cola was for a period nearly out of circulation and is only now re-establishing a presence, without many noticing due to the preponderance of Bigi Cola.

“Bigi has presence here, said Mr. John Okon, a taxi driver based in Calabar Cross River State. “And from my frequent trips to Uyo and Port Harcourt, I can also tell you that it has presence in those places too.”

Regardless, our interactions with people in the South South revealed that Coca-Cola and Pepsi still remain popular. But in the South West, Bigi vastly dominates the low end market. Here, Bigi varieties: Cola, Apple and Tropical, and are in demand and well available.

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“People buy a lot more of Bigi here. It’s my brand too. Generally people are OK with the quantity and the taste,” said Asogwa Andrew, a shop owner at Sango Otta, Ogun State.

“Considering the quantity empty plastic bottles of Bigi I see all around this area, it is obvious that it is the most selling product here.”

Andrew, like nearly 70 percent of respondents – end users and retailers alike – in the Lagos, Ogun and Oyo and Osun states said they buy Bigi, and indeed admitted that it is easily the most selling of all the brands at the moment.

Iya Faiz, a shop owner at Palmview, a low income estate in Denro, Ogun State says she has mostly Bigi products in stock “because that’s what people buy.”

“Bigi brands are the most selling,” she said. “People buy Bigi Cola, Bigi Tropical and Bigi Apple a lot more than others. Apart from those, Pepsi is also in demand. Big Cola is no longer in demand; you can’t even find it in this entire estate.”

She explained further that. “There was a period when we could not get supplies of Big Cola for two months. They were not available. And that was when Bigi took over.”

We took her challenge to look for Big Cola around the estate and even beyond, but to no avail. There was none. We proceeded in search of Big Cola from Berger in Lagos, all the way to Obalende and Ikoyi, asking hawkers on the road.

And it was striking that many of them didn’t have Big Cola in stock. A far cry from what it was not long ago. However, the product began to reappear last week.

But overall, it doesn’t appear that the recent $50million acquisition of majority share of Ajeast, a subsidiary of Peru based AJE Group by UK-based private equity firm, Duet Private Equity (DPEL), has helped the fortunes of its Cola by much.

When in 2015, Big Cola took the market by storm it had mimicked dominant Coca-Cola to break in. It tasted nearly the same, and looked much like Coke. Yet, in many ways, it was novel. In 60 cl plastic bottle, it offered more value, volume for volume, than Coke and for many Nigerians resident in Lagos and neighbouring states it was really about buying a bigger Coke for lesser amount.

The “intruder” challenging global conglomerates for market share in Africa’s most populous country, and the continent’s biggest economy, became the new leader in its catchment market, cutting deep into Coca-Cola and 7UP’s shares.

This inevitably triggered a response that has since led to an intense Cola war. And while the war raged, with its many twists and turns, it would seem obvious, four years down the road, that Big Cola may not have been able to sustain large production and distribution due to challenges in the economy. In its place, has emerged Bigi, while the “giants” continue to struggle to catch up.

It is interesting, indeed, that a number of hawkers and shop owners asked for Big Cola, proceeded to quickly fetch Bigi Cola instead.

Attempts by BusinessHallmark to ascertain from Ajeast why its Big Cola is scarcely available in the market fell through. The company maintained it doesn’t speak to the press as such role is assigned to an official spokesperson at the global headquarters.

However, insider sources who spoke on the condition of anonymity disclosed that in promoting Big Cola, the company paid more attention to market share rather than profit. They had made little margin, such that when exchange rate began to climb the roof in 2016 – same year Bigi entered the market – the company struggled.

Importation of materials became a challenge and the company laboured to put out products. It was due to this challenge that Bigi Cola displaced it.

The company, is however, undergoing some restructuring, BusinessHallmark learnt, and its products are gradually flooding the market once again. But it would probably find it more difficult re-establishing itself as the leader with Bigi Cola already having prime position. Meanwhile, Rite Food did not respond to BusinessHallmark’s inquiries regarding its plans for the market and profitability.

“My brand is Bigi Cola, and most people in this area buy it too,” said Eniola Ilori in Agege, Lagos.

“I do buy Pepsi,” said Olowafunke Oni in Bariga, “But Bigi is the most selling brand here.”

The most effective tools in the battle, apparently, are volume, price and taste. A number of the respondents said their major attraction to Bigi is taste. It is a revelation which suggests that the idea of most people opting for brands that have less or zero sugar for health reasons is largely untrue. And perhaps, nothing validates this more than the performance of zero sugar Coke in the market.

Big Cola had entered the market offering 60cl for N100. It was to be an effective strategy. It gradually took over, prompting a response from other brands. Pepsi introduced 60cl plastic bottle nicknamed “Long Throat” for N100. It has so far proven a good response. There were much more respondents who chose Pepsi as their brand than those who chose Coca-Cola. Indeed, Pepsi’s 50cl glass bottle sold at between N80 and N100 in most parts of South West does better than Coca-Cola of same volume and price.

For the plastic bottle, Coca-Cola’s biggest challenge, it would appear, is pricing. Its 60cl plastic bottle is sold for N150 as opposed to N100 for Pepsi, Bigi Cola and Big Cola. Its 35cl plastic bottle sold for N100 has not been able to compete effectively. While its 60cl Zero Sugar coke sold for same price has not made huge difference.

“My brand is Pepsi and I think Pepsi is more in demand here,” said Blessing Nwapa in Egbeda, Lagos.

Nigeria’s economy is struggling. And like in all struggling economies, price is a huge factor in determining consumer preferences. It is a reality producers of Fast Moving Consumer Goods (FMCG) are fast adapting to. Producers of milk and tea for instance, have largely moved from small economy sachets for each product, to two in one sachets containing both milk and tea.

Coca-Cola, for some reasons has not played the price game well with its coke brand. However, it has in response, acquired Limca now selling at N100 for 60cl plastic bottle. It seems to be picking up gradually. The Lacasera Company Plc, makers of now ailing Lacasera has also returned with 50cl Smoov Chapman sold at N100. It has been well received.

Notwithstanding, the growing acceptance of Bigi Cola and other newer brands, however, analysts say Coca-Cola is likely to maintain dominant presence in the industry for reasons of economy of scale, distribution channels and financial strength.

“Whenever a new product comes in, they use an aggressive price strategy to penetrate market,” said Dr. Adi Bongo, senior lecturer, Lagos Business School. “We don’t know what is happening to the bottom line of those companies, because they are likely to incur losses at the initial phase while making efforts to penetrate the market. They may not mind losing profit margin.

“Established companies like Coca-Cola and the rest that command significant market share already have economy of scale, such that if it comes to a sort of prize war, they would still operate on lower margin and still be profitable because you have to look at their distribution channel which is nationwide. So they have dominant market shares which will not be taken from them easily.”

Coca-Cola and Pepsi, the two industrial giants, are still doing well in the South East regardless. And it is a nearly even contest. While Bigi has taken the lead in Lagos and most of the South West, the South East is still predominantly Coca-Cola and Pepsi region, even though the latter has closed down its plant at 9th Mile Corner Enugu because of lack of profitability. This is largely because Eva Water, its new goldmine, has been displaced by Rev. Fr. Ejike Mbaka’s Aqua Rapha.

“I go with Pepsi,” said Chika Charles in Independent Layout, Enugu. Down here, we go mostly with Pepsi. We don’t know about Bigi and Big Cola. We only know about Coca-Cola, Pepsi, Fanta and Mirinda.”

“Which one be Big Cola and Bigi Cola?” queried Nnaji Kenneth, a resident of Amechi, a suburb of Enugu. “Coca-Cola is my brand and by far the most selling here.”

In Awka, it is not different. “I only know about Bigi sausage roll,” said Chioma Emeagi in Awka. “I don’t know any drink called Bigi. Coca-Cola is the most selling soft drink brand here.”

Coca-Cola Company (NYSE: KO) released its Q1 2019 financial results on April 23, 2019, beating market expectations for revenue as well as earnings. The company had however, delisted from the Nigerian Stock Exchange but the impact of its challenges in Nigeria cannot be immediately ascertained.

The company reported overall revenue of $8.02 billion in Q1 2019, marking a growth of 5.2% over Q1 2018. The higher revenue, it disclosed, was mainly a reflection of unit case volume growth of 2%, price/mix growth of 5%, and concentrate sales growth of 1%, driven by consumer-centric innovation and solid revenue growth management initiatives, partially offset by volume decline in Argentina, the Middle East region, and North America.

There was generally a healthy growth in the company’s sparkling soft drinks, juice and plant-based beverages, sports drinks, and tea and coffee products. The acquisition of Costa Limited in January 2019 also led to an increase in its top line.

Adjusted earnings came in at $0.48 per share in Q1 2019, marginally higher than $0.47 per share in the year-ago period. Higher earnings were driven by recent refranchising of low-margin bottling business and cost savings from ongoing productivity initiatives.

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