Emerging overseas markets are shaping up as the new soft-drink battleground.
In a prime example, Pepsi-Cola International plans a New York news conference today to introduce the high-profile African-American investors involved in its new South African bottling venture. Also on hand: Khehla Mthembu, chairman-CEO of the bottling operation and a former South African freedom fighter. Ian Wilson, founder of Egoli Beverages, Pepsi's partner in the venture, also will attend. Mr. Wilson spent 25 years in senior international positions with Coca-Cola Co.
"South Africa couldn't belong more to Coca-Cola," said a Pepsi spokesman, contending Coca-Cola has 80%-90% of the $1 billion market. "We divested in '85 and they maintained a huge presence. But we'll literally be `the choice of a new generation.'*"
Coca-Cola had its own announcement last week: a new bottling joint venture with a group of black South African investors.
South Africa is only one of many international markets opening or heating up. Also last week, Coca-Cola announced that-along with two bottling partners-it will invest an additional $100 million in the next three years in Russia, a market long dominated by Pepsi.
"There's been a slowing down in soft-drink growth in western Europe, Japan and Australia," said Roy Burry, an analyst with Kidder, Peabody & Co., New York. "Now eastern Europe, India, China, Mexico and parts of Latin America are the hot spots."
No one has come close to Coca-Cola internationally. The company gets about 10.5% of its $13.7 billion soft-drink revenue from international markets, Mr. Burry said. The nearest competitor, Pepsi-Cola, gets 2.9% of its $9.4 billion in sales from outside the U.S.
Coca-Cola has the most extensive advertising programs outside the U.S., but even a company spokeswoman admits that marketing is secondary to building infrastructures and distribution networks in emerging markets.
"The best advertising in the world won't do much without a strong selling apparatus in place," she said.
As a result, there still is plenty of room for everyone.
Royal Crown Co. recently announced "a significant leap forward" in its international efforts with a long-term agreement with Mexico's largest independent bottler, Consorcio Aga.
In just a little over a year, RC has entered the Czech Republic, Argentina, Syria, Portugal, Australia and Indonesia. The next target: Brazil.
Douglas Tough, president of Cadbury Beverages International, which handles RC's efforts in Mexico, South America, Africa, the Middle East and Asia from the U.S., noted: "Between India and China alone you're talking 40% of the world's population. And these are basically virgin markets. Just like real estate, it's location, location, location. And we want to be there."