Coca-Cola Co.'s return to direct distribution and heavy marketing support is expected to boost spending in the soft-drink category by more than 30% to $13.7 million this year, local executives say.
To come back, Coca-Cola acquired National Beverage Services, which has acted as a distributor of Coca-Cola's soft drinks since the U.S. company left South Africa in 1986.
National Beverage Services bottled Coca-Cola locally during the interim years, and as a result, Coca-Cola brands account for 75% of the 275 million-case South African soft-drink market.
Despite its technical absence in the category, Coca-Cola has consistently advertised in South Africa, using its international theme line, "Always Coca-Cola."
Last year, it spent about $3.6 million in TV, print, radio and outdoor handled by McCann-Erickson South Africa. Local adaptations include some spots using South African pop group Mango Groove.
Coca-Cola Co. is heading for an ad war with Pepsi-Cola Co., which returned to South Africa last June after leaving in 1985.
Unlike Coca-Cola, when Pepsi left the country so did its product. There was no advertising to keep the name alive among consumers.
Local agency and marketing executives say Pepsi will have to outspend its rival considerably-budgeting upwards of $4 million-to claim a slice of the carbonated soft-drink market.
Pepsi is returning through New Age Beverages, a company 75% owned by a U.S. partnership called Egoli Beverages and 25% owned by Pepsi. Pepsi is already planning on spending $100 million to build a distribution base in South Africa, since Coca-Cola owns much of the current distribution for soft drinks.
Pepsi has two ad agencies, including a new office of its multinational shop BBDO Worldwide, which itself announced its own return to the country July 1 after leaving in 1988. The other is Herdbuoys Advertising. New Age Beverages CEO Khethla Mthembu said a choice of one agency will be made by late August.
Other big names also are returning to South Africa.
In athletic shoes, just less than $1 million in fresh ad spending will be forked out by Nike through the distributorship route.
Nike departed in 1989 but in May appointed local company Odyssey Sports as its sole distributor and licensee here.
General Manager Stephen Stone estimated the market for athletic and leisure footwear totals 25 million pairs a year with "upmarket" brands Nike and Reebok and local brands holding the biggest shares.
Reebok South Africa is a leading brand despite the fact that the company bailed out in 1987 and returned only in March. Leo Burnett Co.'s local office handles advertising, which will adapt the international creative with a local flair.
But Reebok isn't what's worrying Nike.
"The biggest threat to Nike's successful re-entry into South Africa is the country's battered and price-conscious consumers," Mr. Stone said. "With brands like Adidas protecting themselves from poor exchange rates and import duties by gearing up for local manufacturing, we're going to have to watch our margins carefully and look for long-term growth as opposed to short-term riches."
Nike agency Media Graphics is adapting a global campaign, created by Wieden & Kennedy, Portland, Ore., for local cinema, TV and print ads. "We'll prepare billboards along the lines of Nike's global creative but will produce these locally," Mr. Stone said.