Coca Cola Brazil
A12-04-0025
Coca-Cola’s Marketing Challenges in Brazil: The Tubaínas War
Introduction
For about a decade, the Coca-Cola Company’s Brazilian subsidiary tried to stop the growth of tubaínas (too-bah-ee’-nas). The word tubaínas designates numerous brands of fairly inexpensive, carbonated, and rather sweet beverages sold throughout Brazil. For more than half a century, hundreds of micro, and a few medium-size, manufacturers produced and distributed the so-called tubaínas on a local or regional basis. Brazil was Coca-Cola’s third largest operation and, after Mexico, the company’s second largest international market. Until the mid-1990s, tubaínas’ combined market share did not pose a threat to Coca-Cola. However, in the next decade, due to important environmental changes, tubaínas’ sales steadily grew in Brazil, making inroads into Coca-Cola’s business and jeopardizing the company’s profitability. Rather than the cola war (the name given to Coke versus Pepsi competition in many countries), the real issue for the Brazilian subsidiary of the Coca-Cola Company has been the tubaínas war. Over the years, Coca-Cola attempted different strategies to undercut tubaínas’ growth. Pepsi-Cola, CocaCola’s notorious contender, ranked fourth among the best-selling soda brands in Brazil. However, Pepsi also gained market share, thanks to its partnership with Brazilian beverage manufacturer AmBev and the successful launch of Pepsi Twist in 2003.
Background
Mr. Brian Smith, a University of Chicago graduate and a close colleague of Coca Cola’s world vicepresident Brian Dyson, arrived in Brazil in August 2002 to assume the presidency of the Brazilian subsidiary of the Coca-Cola Company. Mr. Smith was the third president of Coca-Cola in Brazil since 1997 (that is, in just a six-year period).1 Coca-Cola expected Mr. Smith to lead the Brazilian subsidiary to the position of largest overseas operation, surpassing Mexico.2 To fulfill this goal, Mr. Smith’s assignment was to improve the
Coca-Cola’s Marketing Challenges in Brazil: The Tubaínas War
Introduction
For about a decade, the Coca-Cola Company’s Brazilian subsidiary tried to stop the growth of tubaínas (too-bah-ee’-nas). The word tubaínas designates numerous brands of fairly inexpensive, carbonated, and rather sweet beverages sold throughout Brazil. For more than half a century, hundreds of micro, and a few medium-size, manufacturers produced and distributed the so-called tubaínas on a local or regional basis. Brazil was Coca-Cola’s third largest operation and, after Mexico, the company’s second largest international market. Until the mid-1990s, tubaínas’ combined market share did not pose a threat to Coca-Cola. However, in the next decade, due to important environmental changes, tubaínas’ sales steadily grew in Brazil, making inroads into Coca-Cola’s business and jeopardizing the company’s profitability. Rather than the cola war (the name given to Coke versus Pepsi competition in many countries), the real issue for the Brazilian subsidiary of the Coca-Cola Company has been the tubaínas war. Over the years, Coca-Cola attempted different strategies to undercut tubaínas’ growth. Pepsi-Cola, CocaCola’s notorious contender, ranked fourth among the best-selling soda brands in Brazil. However, Pepsi also gained market share, thanks to its partnership with Brazilian beverage manufacturer AmBev and the successful launch of Pepsi Twist in 2003.
Background
Mr. Brian Smith, a University of Chicago graduate and a close colleague of Coca Cola’s world vicepresident Brian Dyson, arrived in Brazil in August 2002 to assume the presidency of the Brazilian subsidiary of the Coca-Cola Company. Mr. Smith was the third president of Coca-Cola in Brazil since 1997 (that is, in just a six-year period).1 Coca-Cola expected Mr. Smith to lead the Brazilian subsidiary to the position of largest overseas operation, surpassing Mexico.2 To fulfill this goal, Mr. Smith’s assignment was to improve the