Virgin Cola launches in South Africa with new taste

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JOHANNESBURG -- Virgin Cola will launch in South Africa next week, with a unique flavor specially formulated for this market. South Africa, which spends $90 million a year on carbonated soft drinks, will be the fourth country for Virgin Cola, after the U.K., France and Japan. A U.S. launch is planned.

Virgin Corporate Affairs Director Tracey Meaker says the flavor was determined after extensive taste tests. "We think we have a winning formula," she says. Brands marketed by the Coca-Cola Co. control 75% of soft drink sales in South Africa.

British entrepreneur Richard Branson extended his airline and retail brand Virgin into the U.K. soft drinks market in 1994. Although the company says its cola sales grew by 12% last year, it's market share suffered late last year. In the four weeks to November 29, it's market share was 4.7%, according to Taylor Nelson AGB. Then for the month of December, Pepsi launched a "buy-one, get one free" promotion and Virgin's share fell to 2.2%. By the end of January, its share had only recovered to 2.3%.

Virgin, which recently put on hold a national rollout in Australia, says it hopes to grow the South African soft drinks market.

"In a rather staid marketplace, we feel the product is different in that it's very consumer- driven, youthful, fun, energetic and innovative. It will be followed by a range of other flavored carbonated drinks. We hope to stimulate total demand rather than just taking market share from existing competitors. We are pro choice and pro competition," says Ms. Meaker.

The price will be competitive, but close to that of other major brands. "We're not looking to spark a price war, but to provide a wider choice with a quality product at good value for money," says Ms. Meaker.

The launch follows less than a year after the collapse of Pepsi-Cola's bid to establish a foot- hold in a market dominated by Coca-Cola, which accounts for 50% of carbonated soft drink sales, and its associated brands (including Sprite, Fanta, Krest and Diet Coke) which share another 25%. At one stage Pepsi captured a claimed 60% of the key Soweto urban market, the country's biggest and most affluent concentration of black consumers. But then Pepsi's bottler, New Age Beverages, went bankrupt owing creditors $80 million. The corporate liquidators cited poor management, and a widely held view was that New Age tried to expand too fast geographically instead of consolidating its gains.

Rejecting this conventional wisdom, Virgin will launch nationwide, initially concentrating its attack at the affluent end of the market and working down.

Copyright February 1998, Crain Communications Inc.

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