pepsi

In Southern Africa, Pepsi has never managed to compete with Coca-Cola effectively. It recently returned to South Africa after a dramatic exit some years back and had never bothered exploring regional markets. As a result, Coca-Cola has been the dominant non alcoholic beverages player, with a wide reaching presence (anywhere you can think of). The party appears to be over as Indian based RJ Corp (through its Varun Beverages International subsidiary) is leading Pepsico’s charge across the region. RJ Corp is operated by a successful Indian serial entrepreneur with a great appreciation of how to serve the bottom of the pyramid. It began investing in Africa in 2010, attracted by what it deemed as virgin opportunities. The company is backed up by over twenty years as a Pepsi bottler in India and is well capitalised. If recent moves are anything to go by, Pepsi will gain enough market share to rival Coca-Cola . Varun is attacking the regional market from it’s bottling operations in Mozambique and Zambia. By producing locally and leveraging on preferential regional trade instruments such as the Common Markets for East & Southern Africa, the company is managing to compete effectively in tough but profitable territories such as Zimbabwe. Here are the clever tricks it is employing:

 

FMCG Strat

 

 

A. Pricing

I work near the largest local university and drank a can of Pepsi Cola purchased on campus yesterday and also did so at least twice during the week. As I put together this post l have just downed two Mirinda cans. Where Coca-Cola’s products retail for $1 in Zimbabwe for a can, Pepsi is managing to retail for an amazing $0.50! In price sensitive markets (such as the the whole of Sub Saharan Africa…), a difference of at least half will never go unnoticed! Especially to Africa’s bulging youth population…

 

B. Packaging

It’s only just just occurred to me that Pepsi are are employing a packaging trick that most consumers will either not notice or totally ignore. Instead of the standard 330 ml can that Coke and other drinks are available in, Pepsi are pushing their products in 250ml cans and PET plastics. It’s hard to notice this though because the can is elongated, looking and feeling just like any other… Even after noticing, I personally overlooked this fact. The reason for this is two fold; firstly the cheapest variant of Coke comes in a bottle. To buy it, an empty bottle is required as a replacement. This is obviously a very inefficient way of doing things (imagine walking around with a bottle reserved for a thirsty occasion). Pepsi immediately wins in this department as cans or PET packaging is light and disposable. Secondly and interlinked to pricing (point A) is the fact that people in Africa aspire for better consumer experience as is the case with those anywhere else. Their key difference is the cost at which they are able to fulfil such aspirations. A can is trendier and more convenient than a bottle. So too is PET plastic packaging. Playing into such perceptions is not only profitable but important. This is due to the fact that consumers with limited income streams lack enough money to consume products or services in ‘universally’ established units or would rather purchase in smaller volumes to stretch their limited spending power. Unilever used this approach with great effect in East Africa by selling washing powder in unconventional (very SMALL) packs but at faster cycles (thereby pushing more volumes and generating more revenue). I’d rather quench my thirst with two Pepsi Colas than 1 Coke for the same price. Besides the fact that Pepsi provides more value, it is more in tune with the consumptive patterns of local consumers.

 

 C. Distribution:

I haven’t come across Pepsi products at the trendier Spar Supermarket that is near the office, neither have I come across them at the spar near home. Pepsi has instead found it’s place at mass market sites such as convenience stores, retail outlets and tuck shops. Why serve the 1% with value that won’t matter to them? Titans like MTN Group have shown that the mass market can be a phenomenal gold mine if served well.

 

When doing business across Africa’s diverse markets, the one common trick you’ll never go wrong with is providing real value at world class standards. The market is thirsting for this…

 

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