Cola War intensifies: Coca-Cola, 7up slash prices
Brand war has heightened in the Cola drink market forcing 7up and Coca-Cola Plc, to slash their prices by 11% and 18%, respectively, in a bid to checkmate Big Cola, a new entrant launched into the Nigerian market by Ajeast Nigeria Limited.
Ajeast Nigeria Limited is a subsidiary of AJE Group, the 4th largest producer of carbonated soft drinks globally. A multinational of Peruvian origins known for value-for-money soft drink products, the Aje Group has presence in Latin America, Asia and Africa in countries like Brazil, Ecuador, Mexico, Peru, India, Indonesia, Nigeria and Egypt.
Before the drop in price of their products, the wholesale price of a carton of PET bottle (50cl) of Coca-Cola was N1000 while Pepsi went for N950. However, the coming of Big Cola with its offer of PET bottle at N850 has forced the two giants to beat a retreat. Today, Coca-Cola is N900 and Pepsi N850. The retail price of PET Bottle of both Coca-Cola and Pepsi still stand at N100. However 35 cl refill bottle of Coke has dropped from N60 to N50, same goes for 7up.
Wholesalers at the popular Agege Provision Market ,Lagos,who spoke with Business Hallmark confirmed that the coming of Big Cola forced the two big players to listen to their plea for a price reduction.
The CEO, Favour Stores, Mr Afam Nwizu, who described Big Cola as “God-sent” said its coming has forced Coca Cola and 7up to bring down their price. Nwizu explained that Big Cola was able to upset the apple cart because it offers both wholesalers and retailers higher returns than Coca-Cola and 7up. According to Nwizu, retailers make a margin of N100 from each carton of Coca-Cola sold while they make N200 from Big Cola.
“Big Cola is the talk of the town. That is what people are buying now because of the size(volume) and price. Retailers make more profit from big Cola that is why they are pushing it in the market.
“Four years ago, you would buy Pepsi, (a carton ) at N950, Coke at N1050. That time we were telling them to reduce it, but they refused. They said that their operating cost was high and that they were not even making any profit. Now this is 2016, the economy is worse than it was four years ago but they have now brought down the price.”
Another wholesaler of non-alcoholic beverages, who gave his name as Mr Uche AC, corroborated Nwizu on consumers’ response to Big Cola.
“People like it because of price, size and quality. It is the same thing like Coca-Cola if you taste it.”
Reacting, a brand communication expert and the CEO, Heritage Quality Services Consult Limited (HQSC )Limited, Nnanke Harry Willie, while noting that the development is typical of ‘competition’ said that the new development is good for both the consumer and the economy.
“It is good for the consumer and the economy.”
Like Coke, Like Big Cola
Apart from its volume and price, what is believed to be given the newcomer an opening in the market it is it copy taste which similar to Coke.
A trend which brand experts called, copy-cat branding. Copy-cat branding is mimicking a brand (usually a market leader), in appearance, colour, size, and in this instance, taste especially while selling the lookalike at a lower price.
Copycat brands are common in the fast-moving consumer goods sector but the practice has gone beyond consumables to technology brand as cars and hand-held-devices are known to have been cloned by competitors. For example, in 2014, Apple sued Samsung for billions of dollars for copycat of its product.
According to brand experts, copy-cat branding creates confusion in the minds of consumers as, owing to the striking similarities, copy cat brands ride on the popularity and brand equity of market leaders to sell their offerings.
For instance, except a die-hard Coke loyalist who can smell a Coke from a distance, anybody who tastes Big Cola, is more likely to associate the values of Coke to Big Cola, because of the similar taste.
Apart from the allure of cheaper price, Copy-cat branding gives room for ‘accidental purchases’ where a consumer mistakes one for another or buys one because he cannot see the market leader at the point of making buying decision.
A blind taste of Coca-Cola and Big Cola involving 22 persons was conducted. 14 were served Big Cola in red cups while 8 were served Coke in white cups. When asked what they drank or their experience, 41.5% (5 out of 12) of those who drank Big Cola thought they drank Coke, another 41.5% were sure it was not Coke while 15% (2 out of 12) named other products.
Amongst those who experienced Coke, 75% were cocksure it was Coke, while 25% thought they drank something else.
One of the testers, Richard Aderoumu, on experiencing Big Cola, noted, “It tastes like it is the Big Cola. It is a little softer on the palate. I think that Coke has a little more gas.”
On what he would recommend as a line of action by the market leaders, Harry Willie suggested, while noting that, “Every new entrant will decide what route to take to get to the consumer. If Big Cola has decided that it is its more for less, for the big players know the dynamics have changed. They have to be proactive, go and look at their own business strategy to decide if give more to consumers in terms of volume and price.”
When contacted, the Corporate Communication Director, Coca-Cola, Mr Clem Ugorji, did not take his call or respond to emailed enquiry. However, Metro Media, communication managers of 7up Plc denied any price reduction of the products marketed by its client.
“There has not been price increase or decrease.” The MD of Metro Media, Mr Mike Nzeagwu said. When we insisted that market survey showed there was, Nzeagwu reasoned that some wholesalers may have reduced the price in a bid to increase their volume sales.
Note: This article was first published in Hallmarknews.com on November , 2015
