Thailand becomes key battleground in cola wars

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Thailand becomes key battleground in cola wars
Thailand becomes key battleground in cola wars

Coca-Cola and Pepsi Co, the two leading cola providers worldwide, are competing fiercely in the Thai market from a new domestic player and a South American rival. With its year-round warm weather and spicy cuisine, Thailand is a major consumer of cola drinks. The market grew 25% over the five years through 2013 to $1.8 billion, according to research company Euromonitor. Local convenience stores sell the beverage in sizes ranging from 360cc to 500cc bottles, making simple price comparisons difficult. Coca-Cola and Pepsi Co together had an 85% market share in Thailand back in 2009. But as of last year, the figure had shrunk to about 70%. The rise since the end of 2012 of Est Cola, produced by Thai beverage maker Sermsuk, has altered the landscape.

Sermsuk had bottled and distributed Pepsi on behalf of Pepsi Co for six decades, until the partnership was dissolved after a failed 2010 hostile takeover bid by the U.S. company. Sermsuk decided to use its 1,200 trucks, 150,000 refrigerators, and customer base of 200,000 retailers — all cultivated through the partnership with PepsiCo — to become “the other cola,” with support from its new top shareholder, Thai Beverage Logistics. By sponsoring Premier League champions Manchester City, a popular team in Thailand, Sermsuk quickly gained brand recognition and achieved a market share of 9.1% in 2013.

PepsiCo plunged 16.4 percentage points compared with a year earlier to 20.2%. The color scheme of the Est Cola logo, which employs the blue, white and red from the national flag, resembles that of Pepsi. Another up-and-coming cola maker is Peruvian company Aje, whose share rose 1.6 points to 19.3% last year. Its caffeinefree Big Cola has gained popularity among teenagers since its 2006 release in Thailand. The company built its first Asian plant in Chonburi Province. The outcome of the competition in Thailand may affect the future of the global softdrink market.

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