Beverage companies

by rohit on October 2, 2007

One of the most interesting things for a marketer is facts about a category of interest.Here are some nuggets on the beverages industry that I picked up last few days.

Pepsi has divided it’s product portfolio into three groups (the classification is telling) :
Fun-for-you e.g. Pepsi beverage
Best-for-you e.g. Diet Pepsi
Good-for-you e.g. orange juice
Currently, fun-for-you accounts for 70% of the total business and over the next decade, the company seeks to reduce this to 50% and increase proportion of best-for-you and good-for-you.

For Coca-Cola, 30% of all beverages are consumed in emerging markets as against 70% of business from the developed markets and the former are enjoying unprecedented growth with large numbers joining the middle class. The company has 400 brands across carbonated soft drinks,juice,water,tea,sports drinks, sparkling water and energy drinks among others.The company had problems in the early 2000s due to an inward looking culture,lack of focus on customers and innovation and lack of alignment with bottlers. However, in the last 18 months the company has grown in both emerging and developed markets and the stock price has risen by 40%. The company’s President & COO Muhtar Kent says it is because it has become better at commercialising it’s innovations and succeeding with it’s new product launches. Also, a “winning culture” defined by him as “belief in knowing what we are doing and where we are going”.

And India is the only market where a local brand (Thums Up) has done as well as the flagship brand Coca Cola.

UK’s Datamonitor Group’s data shows that carbonated beverage sales have been nearly flat last 6 years (growth at 1% p.a.) while the overall beverage market has grown reasonably at 6% p.a. :
Carbonated drinks $1.31 bio (1999) $1.32 bio (2006)
All drinks $3.15 bio (1999) $3.34 bio (2006)

Tata Tea has some interesting plans.They overtook Hindustan Unilever two months ago to become the volume leaders in the tea market (HUL remains the value leader). The tea market in India is valued at Rs. 110 Billion with a tonnage of 950 million kg. Black tea volumes are stagnating causing tea companies to push the other varieties.

Tata Tea has now launched a new campaign “Jaago Re” to position the Tata Tea brand as an umbrella brand to the four product brands of the company. The multimedia campaign is targetted at youth, uses a 45 second commercial and revolves around the theme of awakening youth vis-a-vis various social causes. A cup of Tata Tea “awakens” you, seems to be the subliminal message.

Starbucks which has it’s stores in 40 countries already,has for the moment shelved plans to enter India. However, it has entered into a global arrangement with Pepsi to market its ready-to-drink products through Pepsi’s distribution system. This could well result in Starbucks bottled drinks hitting the market here in India ahead of it’s retail stores. Incidentally, all of Starbucks’ 11,000 odd stores are owned, not franchised.

Hey, marketing guru Seth Godin has this number for the different number of customized beverages one can get made at Starbucks : 19,000,000.

Joseph Mitchelli, author of book The Starbucks Experience who was in Mumbai recently for the Asian Brand Congress has this to say on what a Starbucks (customized) beverage is : ‘customization – with the handcrafted assistance of the barista or coffee preparer – is about satisfying each customer’s unique expectations, and often involves special temperatures,soy milk, and various pumps of flavor. It is not uncommon to hear customized orders for drinks as complicated as “quad,two-pump vanilla, one and one-quarter pumps sugar-free hazelnut,ristretto latte, with one-quarter soy, one-half non-fat,one-quarter organic milk,extra hot,with three ice cubes and whip!’ This is what Seth Godin refers to when he mentions 19 million variants.

Mitchelli further quotes Starbucks founder Howard Schultz on the Starbucks brand :
The success of Starbucks demonstrates …that we have built an emotional connection with
our customers…We have a competitive advantage over classic brands in that everyday we touch and interact with our customers directly. Our product is not sitting on a supermarket shelf like a can of soda.
(This reminds me of websites which are interactive too in somewhat similar fashion!) Our people have done a wonderful job of knowing your drink,your name, {and} your kids’ names.
Further, says Schultz:
We are not in the coffee business serving people, but in the people business serving coffee.
The equity of the Starbucks brand is the humanity and intimacy of what goes on in
the communities…The Starbucks environment has become as important as the brand itself.

U.K based Costa Coffee (their brand graphics have a close resemblance to Starbucks, no idea how they got their copy-cat trademark through!) has entered Mumbai through an arrangement with Ravi Jaipuria who is also the franchisee for Pepsi’s Pizza Hut & KFC. They have an outlet in Juhu at a you can’t miss it location, right where a Sony outlet used to be. Understand from HT Cafe columnist Vidhi Bhargava’s column that they are in Agra, Amritsar & Lucknow already. The chain was started by Italian brothers Sergio & Bruno Costa in London in 1971.Vidhi rates it a cut above many cafe joints but says it’s too early to say whether it will pose serious competition to CCD, Barista and Mocha.

Leave a Comment

Previous post:

Next post: