NEW FIZZ

New Delhi, Jan. 24: With the passage of time, the cola industry is changing colours. The oligopoly of the two cola majors—Coke and Pepsi—seems to have realised that long-term growth requires looking beyond the ‘plain Jane’ brown colas.

Pepsi crossed the colour bar today when it unveiled its blue cola—a limited edition cola launched just before the World Cup cricket tournament next month and an expression of its solidarity with Team Blue (India).

But the larger change in the cola industry, which has been noticeable over some time now, is the new mantra of brand extension. It extends not only to soft drinks with fancy positioning and colours but also extends beyond the category of fizz drinks itself.

Although plain vanilla carbonated drinks continue to be the bread and butter for the cola majors, Vibha Rishi, marketing director, of Pepsi, claimed, “In the last nine months, Pepsi Aha (its cola drink with a twist of lemon) has contributed 7 per cent of Pepsi’s sales and Rs 120 crore of business.

However, she admits that this year Aha’s contribution to sales is expected to go down to 5 per cent—a downturn she ascribed to a natural “life cycle of a brand”. Does this signal an era of one season launch of brands to leverage brand value?

The present Pepsi blue, launched for the duration of the cricket World Cup 2003 in February where Pepsi is a sponsor, may be one to reinforce Pepsi’s association with the Indian cricket’s men in blue. But it is also reflective of a trend that is seeing the transformation of the cola majors in their search for survival.

Pepsi is targeting the sale of about one million cases of the blue cola.

It is increasingly apparent that brand extensions are looking beyond the fizz. Coca-Cola is already targeting the entire non-alcoholic beverages market. Last year, the company got into the ready-to-drink hot tea and coffee market, first with its premium brands of Georgia gold (priced between Rs 14-21) and later with a mass version priced at Rs 4 for tea and Rs 5 for coffee.

Pepsi did not get into the tea-coffee act itself but tied up with FMCG behemoth Hindustan Lever Limited (HLL) towards the middle of this month into an alliance for complementary distribution of each other’s hot tea/coffee and soft drinks respectively.

Rajeev Bakshi, chairman of Pepsico India Holdings Private Ltd, said, “Pepsi will be able to have access to about 10,000 vending points of HLL, predominant in the institutions like offices and educational institutes. Pepsi brings to the deal the kinds of vending points that HLL was looking for to increase its product offtake.”

According to projections that have been made by Coca-Cola, the total non-alcoholic commercial beverages market in India is 19.5 billion cases, out of which 70 per cent is tea and coffee and only 2 per cent is carbonated soft drinks. Further, 94 per cent of the tea/coffee market is for the hot beverage.

Coca-Cola has maintained that even in five years’ time, about 60-70 per cent of the company will still be from soft drink sales. However, the fact remains that carbonated soft drinks have one of the lowest per capita consumption in this country compared with some of our neighbouring and other third world countries. Some of the recent products from the Coca-Cola stable has been non-fizz drinks like Shock— the ginseng-based drink that promises an extra shot of energy, and Sunfill—the powder soft drink that was launched to corner the market dominated by Rasna.