Insight: A fizzy beginning but a strong recovery

As per company officials, the demand for carbonated soft drinks is continuously increasing. STOCK IMAGE

LAHORE: 

Unknown to many, one of the world’s largest non-alcoholic beverage manufacturers and a renowned international brand – Coca Cola – struggled to find its footing in Pakistan. Its inception paved the way for a whirlwind performance with the company losing its market share in 1987 that passed on to local retailers.

However, after the company lost market to local rivals, it has passed through a transition period since 2006. During the time, Coca Cola Beverages Pakistan Limited (CCBL) changed their business model to match its global company’s.

Speaking about their days of struggle, CCBPL Director Public Affairs and Communications Zafar Abbas Jafri said, “Acquiring back the franchises from local investors was slow and painful; we did this because the local franchise investors were not following the CCBPL strategy.”

Since 2006 and particularly after 2008, the company has started investing heavily in its infrastructure and around $350 million has been invested in new factories and product diversification, he added.

CCBPL was established back in 1996 and was a subsidiary of its parent company. In 2008, Coca Cola Icecek (CCI) acquired 49% shares of CCBPL and since then the company is continuously improving both its commercial operations as well as its environmental sustainability practices in Pakistan. Since 2008, the company has increased its market share by 30% and doubled its sales volume.

The CCBPL currently has 35% market share in the carbonated soft drink segment, second to its rival Pepsi Co, which is enjoying 49%.

“Our vision is to be a market leader and we are reducing the gap every passing day. We gain 10 share points in a year.  In Lahore, we became the market leader in 2008 and in Rahim Yar Khan in 2012,” Jaffri said.

CCI today operates six plants and 13 warehouses in Pakistan, as per company officials, the demand of carbonated soft drinks is continuously increasing. They are now targeting expansion, aiming to increase its capacity 1.5 times by 2017, building three plants in Multan, Islamabad and Karachi.

Pakistan is a highly growing country and is ranked among the top 20 markets within the Coca Cola system.

According to 2013 year end results, Pakistan constitutes 19% of the total production volume of CCI. In 2013, CCI grew by 22% in Pakistan as sales volume went over 200 million unit cases. For the first six months of 2014, CCI’s sales volume was 16% higher than the same period previous year.

Despite this impressive growth, the company is still facing several problems, with taxation woes and issue of counterfeited products.

Jafri claims that local brands are exempted from taxes; a level playing field that should be given to multinationals for better competition.

Talking about counterfeited products, Jaffri said that this has resulted in a loss of 10-15%, and the government is bearing a loss of around Rs1 billion annually due to such products.