…as Coca-Cola battles mass product segment

By OBINNA EZUGWU   |

Global carbonated drinks brands, Coca-Cola and 7Up Bottling Company, have, in recent years, had to watch new entrants into the Nigerian market: Rite Foods’s Bigi Cola, Ajeast Nigeria’s Big Cola and lately Royal Crown Cola International’s RC Cola, cut a large chunk of their market shares. A development which, some say, partly forced them out of the Nigerian Stock Exchange to avoid public scrutiny of their no- longer-so impressive books.

With simpler organisational structure and less encumbrances, the minnows: Bigi Cola and Big Cola used bigger 60cl volume sold at N100 to break into, and indeed dominate the South West segment of the cola market, leaving Coca-Cola and 7Up gasping for breath. Both companies would eventually de-list from the Nigerian Stock Market.

Unable to quickly adjust to the minnows’ volume game, Coca-Cola and Pepsi, particularly the former, found their shares of the market shrink rapidly. 7Up was the first to eventually react. The company introduced 60cl Pepsi plastic bottle nicknamed “Longer Throat.” It proved effective, subsequently becoming the second most selling brand behind Bigi Cola as shown by BusinessHallmark research.

Coca-Cola’s 50cl “Big Coke” sold at N150 couldn’t compete as a result of its higher price. Its 35cl “Small Coke” sold at N100 was no match for 60cl Bigi and Big Cola sold at the same price, especially in low and middle end markets where the most buyers are. Only the company’s 60cl Zero Coke sold at N100 maintained a presence, albeit as a fringe player. Coca-Cola appeared, at some point, to have abandoned the South West market to competition altogether.

Whilst Bigi, Pepsi and Big Cola were having a field day in the South West, more so the former – forex challenges had encumbered Ajeast Nigeria, leading to the disappearance of Big Cola for long periods and it has continued to struggle till date. RC Cola which with 50cl bottle was unable to break into the market, recently, carved a niche in the South East where it suddenly became the dominant cola brand few months ago, displacing, again, Coca-Cola and 7Up. It was perhaps the last straw.

With their backs now effectively against the wall, Coca-Cola and 7Up have made aggressive return to mass marketing; with the 60cl warfare introduced a few days ago, Coca-Cola introduced 60cl Sprite, Fanta and Limca bottles at N100, and subsequently 5cl Coke bottle for the same price. They are picking up in the market.

On its part, 7Up introduced 60cl Mirinda and 7Up to complement Pepsi. Similarly, Lacasera Company has re-branded and reintroduced its Lacasera beverage drink, predictably, this time in 60cl bottle at N100.

“It’s all about 60cl bottles now,” Salihu a retailer at Fatgbems, Isheri North, Ogun State, had noted. “No 60cl, no market. Nobody go buy your drink.”

To survive the big brands’ onslaught, the minnows, with far less capacity, have tactfully adopted niche market strategy. Bigi Cola has maintained its focus on Lagos and Southwest segment of the market. Although it is where competition is more intense with virtually every brand going for N100, it has continued to hold its own against the big brands as visits to vendors in Mainland Lagos show. Analysts say its likely to be the case for a while.

“What has happened is that the Bigis of this world has set the benchmark price. They still have that advantage because they supply less than N100. The issue is that they don’t have the capacity of a Coca-Cola. They will remain regional strongholds. The trade is going to push those Bigi because they make slightly more profit from them,” Mr. Onos Molokwu, Country Head, Bates Cosse Communication and Marketing Agency, noted.

“For Coca-Cola, while the recommended retail price will be N100, it is that price to the trade that will determine what the trade will push. And once the trade pushes the Bigi and the consumers see the Bigi, they will sell more.

“But there is enough room for everyone. It’s just that the battle has become fiercer. The bigger Coke bottle is now 100, so there is going to be that battle. It’s going to continue throughout this year. What will happen is that the Bigis of this world would be going back to the laboratory to find a way of even bringing down price or increase volume and reduce quality in a way that you will not even notice.”

Molokwu said the N100 price benchmark set by the new brands is attractive and has helped them maintain huge presence. The reason for that N100 is that we have stopped seeing a lot of those small naira denominations in circulation except in modern trade. So, the consumer is comfortable with that N100 price point. There is no problem of change. So the consumer is happy to just pay that N100.”

Few months ago, the Lacasera Company, in an earlier attempt at revival, launched its Smoov Chapman brand. The move has since triggered another kind of cola war: the Chapman war.

Following the introduction of Smoov Chapman, initially in 50cl plastic bottle, and its consequent acceptance by consumers, Rite Foods also introduced its own 60cl Bigi Chapman to fight it off. Sensing the Bigi threat, however, Lacasera, subsequently introduced a bigger version of Smoov, the 60cl bottle to match Bigis. It’s a strategy that seems to have worked as Smoov remains the dominant Chapman brand.

In the Eastern market, RC Cola, though with 50cl bottles, have also found a niche market for itself, competing favorably with Coca-Cola and 7Up. Price is the key factor working to its advantage.

In the East and elsewhere in the country, 60cl Sprite, Fanta and Limca bottles go for N150, same as 50cl Coke bottle. Similarly, 7Up brands such as Pepsi and Mirinda are sold for N120, even as their 50cl bottles remain in circulation there. It’s what has given RC Cola and advantage. Its 50cl bottles go for N100, less expensive and usually no problem of giving ‘change’.

“Coca-Cola brands are sold at N150 in many places. The point is that those Bigis of this world are here to stay if they can consistently keep their marketing drive. If you notice, they have taken over the semi-urban areas,” Molokwu said.

He attributed the higher price of Coca-Cola in locations outside Lagos to cost of transportation.

“The cost of the thing getting to those areas is the reason. Coca-Cola should ordinarily have an advantage in the sense that they have plants in some places, but I don’t know if they have shut down some of those plants.

“So, once you have to take the products from Lagos to Enugu, the cost of transportation would have brought it to N110 or N120. When it gets to that, the wholesalers will have to make small margin on each bottle and usually, everyone is anchoring on N10 margin on the bottle. So, even if it comes to N130 or N140, nobody wants to still want to say, give N20 ‘change’. So, they just bring it to N150.

Unless Coca-Cola can revert to having plants such that it would be easier to access their products at lower cost, they will still be more expensive. RC Cola is selling N100 in the East that’s why I said they are going to remain regional strongholds.”