Coke and Pepsi in Russia: In 1972, Pepsi signed an agreement with the Soviet Union which made it the first Western product to be sold to consumers in Russia. This was a landmark agreement and gave Pepsi the first-mover advantage. Presently, Pepsi has 23 plants in the former Soviet Union and is the leader in the soft-drink industry in Russia. Pepsi outsells Coca-Cola by 6 to 1 and is seen as a local brand. Also, Pepsi must counter trade its concentrate with Russia's Stolichnaya vodka since rubles are not tradable on the world market. However, Pepsi has also had some problems. There has not been an increase in brand loyalty for Pepsi since its advertising blitz in Russia, even though it has produced commercials tailored to the Russian market and has sponsored television concerts. On the positive side, Pepsi may be leading Coca-Cola due to the big difference in price between the two colas. While Pepsi sells for Rb250 (25 cents), Coca-Cola sells for Rb450. For the economy size, Pepsi sells 2 liters for Rb1,300, but Coca-Cola sells 1.5 liters for Rb1,800. Coca-Cola, on the other hand, only moved into Russia 2 years ago and is manufactured locally in Moscow and St. Petersburg under a license. Despite investing $85 million in these two bottling plants, they do not perceive Coca-Cola as a premium brand in the Russian market. Moreover, they see it as a foreign brand in Russia. Lastly, while Coca-Cola's bottle and label give it a high-class image, it is unable to capture market share. Coke and Pepsi in Poland: Poland, with a population of 38 million people, is the biggest consumer market in central and eastern Europe. Coca-Cola is closing in on Pepsi's lead in this country with 1992 sales of 19.5 million cases versus Pepsi's sales of 26.5 million cases. The main problems in this area are the centralized economy, the lack of modern production facilities, a non-convertible local currency, and poor distribution. However, since the zloty is now convertible, Coca-Cola realizes the growth potential in Poland. After Fiat, Coca-Cola is now the second biggest investor in Poland. Coca-Cola has developed an investment plan which includes direct investment and joint ventures/investments with European bottling partners. Its investments may exceed $250 million, and it has completed the infrastructure building. Coca-Cola has divided Poland into 8 regions with strategic sites in each of these areas. Moreover, it has organized a distribution network to make sure its products are widely available. This distribution network, which Coca-Cola has spent a lot of money organizing, is extremely important to challenge Pepsi's market share and to maintain a high level of customer service. Also, Coca-Cola, like Pepsi, signed counter trade agreements with Poland. Both trade their concentrate for Polish beer. All of this has helped Coca-Cola to close in on Pepsi's lead in Poland. Conclusion on Eastern Europe: Both Coca-Cola and Pepsi are trying to have their colas available in as many locations in Eastern Europe, but at a cost which consumers would be willing to pay. The concepts which are becoming more important in Eastern Europe include color, product attractiveness visibility, and display quality. In addition, availability (meeting local demand by increasing production locally), acceptability (building brand equity), and afford ability (pricing higher than local brands, but adapting to local conditions) are the key factors for Eastern Europe. Both companies hope that their western images and brand products will help to boost their sales. Coca-Cola has a universal message and campaign since it feels that Eastern Europe is part of the world and should not be treated differently. Currently, it is difficult to say who is winning the cola wars since the data from the relatively new market research firms focusses on major cities. Pepsi had a commanding 4 to 1 lead in 1992 in the former Soviet Union. Without this area, Coca-Cola has a 17% share versus Pepsi's 12%...
Bibliography: Works Cited A red line in the sand, Economist, October 1, 1994, p. 86. Chakravarty, Subrata N. How Pepsi broke into India, Forbes, November 27, 1989, pp. 43-44. Clifford, Mark. How Coke Excels, Far Eastern Economic Review, December 30, 1993- January 6, 1994, p. 39. Coke v Pepsi, The Economist, January 29, 1994, pp. 67-68. DeNitto, Emily. Pepsi, Coke think international for future growth, Advertising Age, October 3, 1994, p. 44. Murphy, Helen. Cola war erupts in Mexico, Corporate Finance, May 1993, pp. 6-7. Quelch, John A., Erich Joachimsthaler, and Jose Luis Nueno, After the Wall: Marketing Guidelines for Eastern Europe, Sloan Management Review, Winter 1991, pp. 82-93. Selling in Russia: The march on Moscow, The Economist, March 10, 1995, pp. 65-66. Stevens, Clifford. Soft drink wars: Pepsi vs Coke, Central European, July/August 1993, pp. 29-35. Winters, Patricia and Scott Hume. Pepsi, Coke: Art of deal-making, Advertising Age, February 19, 1990, p. 45.
Please join StudyMode to read the full document