CSD market: Players in a ‘chess’ game
There is a serious competition in Nigeria’s Carbonated Soft Drink (CSD), market and according to analysts, the language is simply to outdo another and take the largest chunk of the market share.
New player in the industry, Big Cola from the stable of AJEAST Nigeria Limited, a subsidiary of AJE Group, a privately owned multinational beverage company, with headquarters in Peru and Spain, had entered Nigeria late last year with 65 cl pet bottle at N90. For consumers who are favourably disposed to quantity, market analysts said this development started forcing a tilt to the new product.
Immediately, the market was jolted, as the big players adjusted accordingly to offer bigger content in pet bottle at the same old price. Coca Cola and Pepsi instantly followed suit and increased their content from 50 cl to 60 cl, an addition of 20 percent content for the same price of N100.
It is not clear, whether Aje Group’s tactic and business model is to win consumers first before talking of gains and profits, but it has succeeded in stretching the competition, even more. The other players have equally added more content without price being affected, as they are faced with the prospect of losing existing and prospective customers to this challenge.
Declaring the intention of Big Cola, its Country Manager in Nigeria, Theo Williams, said, during the introduction of its product that the company is in Nigeria to “democratise soft drinks consumption. We dream big; we think big. In line with our global brand values of Brave, Entrepreneur, Ingenious and Surprising, we came to Nigeria with the determination to brace all odds to provide consumers of soft drinks with great choice of quality beverage at affordable prices.
“Our global operational philosophy is that we offer consumers ‘More value for less money’. This implies we democratise the consumption of soft drinks, wherever we operate, ensuring anyone and everyone can afford a drink, every day, anytime and anywhere”, Williams emphasised.
As the competition intensifies, market analysts said the players, in order to remain competitive, are bearing the additional cost that the increase in quantity brings. This is all in an attempt to hold grip of the consumer. It is viewed that there would likely be further market disruptions, as each player battles, to hold on to its market share.
In the past, Coca Cola and Pepsi, the dominant brands that came into Nigeria in 1953 and 1960 respectively have continued to remain strong even in the face of the arrival of new products into the CSD market. LaCasera after berthing in Nigeria in 2001 shook the market as the first carbonated drink to bottle in PET. Described as a daring move in all standards, competition has since followed the trend.
BusinessDay, had in a recent report that assessed the CSD market, acknowledged that “Nigeria is a big market, it is big enough to accommodate every player at different levels, volume, and sales, as beverage drinks will continue to remain the largest selling consumable in spite of healthy eating caution. To some, it is a habit drinking the beverages, while to some others, it is the refreshing satisfaction derived from the drinks, especially when cold creates the attraction to it, while children take pleasure drinking the beverages regularly”.
The report further said that while Big Cola with initial investment capital of N5 billion is coming with its More Value for less money niche to cut some share of the market for itself, brands like Coke and Pepsi have their dominant strategy, and to beat it, perhaps requires a very huge investment.
“For instance, Coke, which has become a quality for benchmark, has a long history in Nigeria, having established its presence in the country about 65 years ago, and since then the brands of the multinational company with headquarters in Atlanta, USA established in 1886 have remained fresh and sparkling in the minds of consumers; enabling them to maintain an entrenched position as longstanding market leader. Not only that, it has top of the mind awareness among consumers and the general public alike.
“There are number of secrets to this success according to Nathan Kalumbu, Coca-Cola’s president for Eurasia and Africa, whose region contributes about 19 percent to the entire company’s growth. In an interview in Cape Town during the World Economic Forum in Africa last year, Kalumbu said, “the most important is focusing on consumers and being able to understand what consumers want. For instance, as Africa continues to grow and the African middle class grows, it is demanding more option of beverages. Our company has been broadening the portfolio of its products to suit the needs of consumers. When we started in Nigeria, we were producing just Coke, but today we have more sparkling brands who are into the juice and water business as well. We are also expanding our packaging options in various sizes and types such as PET, Can and returnable bottles. Another factor is our ability to work with communities and government as partners for development. The other elements are quality and marketing which resonate with consumers”.
Another of Coca-Cola’s strength is big operation and distribution network that has been a strong competitive advantage. Presently, NBC, Coke’s bottler, operates 13 bottling plants, 57 distribution depots and a network of over 600,000 distribution and retail partners. Coke also has a deep pocket for advertising spend in various platforms. The company has continued to lead in the carbonated drink market with about 50 percent market share, according to Euromonitor.
“On the other hand, Pepsi produced by Seven-Up Bottling Company Plc, established in Nigeria in 1960, is one of the largest manufacturing companies in Nigeria. The company has nine bottling plants located strategically across the country. It also has a well-coordinated distribution network across Nigeria. Pepsi which owns leading brands also budgets huge amount for advertising purposes”
The CSD market, according to industry analysts is becoming interesting. Whatever market disruption happens in the competitive market, it is to the advantage of the consumer.
Daniel Obi