The Telegraph
Since 1st March, 1999
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Prices melt in cola cauldron

New Delhi, April 15: The summer heat is on. Cola price lines are melting faster than you could say ‘thanda’.

Coke today matched Pepsi’s move cutting prices of its 300-ml returnable soft drink bottles to Rs 6 from Rs 8. Smaller 200-ml bottles were already selling at Rs 5 each and the buzz in the market is that this could come down to Rs 3 as the summer progresses.

The price war has taken off in Delhi, which happens to be the largest cola-drinking city in the country, accounting for about 10 per cent of the 300 million cases of carbonated soft drinks sold all over India. The cola giants are expected to take this battle to other cities within weeks, if not days.

A Pepsi spokesperson said prices of the 300 ml returnable glass bottle have been slashed to Rs 6 in Delhi as the consumption of the fizz drink is very high here. “The new pricing points may be subsequently extended to other markets,” he added.

Sanjiv Gupta, deputy president of Coca-Cola India, remained cagey on the pricing issue. Traditionally, Coca-Cola has a history of not answering Pepsi’s challenge officially, which probably explains the reticence.

The cola companies have clashed several times in the past over advertisements that poked fun at each other and over a welter of allegations relating to the poaching of personnel and bottlers. Price wars have also been fought but this summer’s war is expected to be one of the most exciting battles as the price cuts are bolder and could impact not only colas but bottled mineral water, increasing the size of the market considerably.

Currently, India’s per capita soft drink consumption is a mere 7.2, whereas even neighbours in South and South East Asia “boast” of a consumption figure which is more than double this figure.

Both the multinational cola majors — Coke and Pepsi — had earlier reduced prices by about 20 per cent in the returnable glass bottles just before the Budget for 2003-04 provided them excise duty relief. At that time, the Rs 10 price for the 300-ml bottles had been brought down to Rs 8.

Earlier this year, in the home-consumption segment, Coca-Cola had taken the lead by slashing prices of its 1.5-litre and 2-litre PET bottles. Predictably, Pepsi also reduced prices of its 1.5-litre and 2-litre PET bottles, to Rs 35 and Rs 40 respectively, against the earlier price of Rs 43 and Rs 50.

The price war is being fought on other dimensions as well. Earlier this year, when Pepsi was selling its 500 ml PET bottle at Rs 15, Coke introduced its 600 ml PET bottles at Rs 12, which forced Pepsi to reduce its price.

Sources said in some regional markets, Coke is offering its Rs 2 powdered soft drink pouches, Sunfill, free with glass bottles.

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