Pepsi declares 'cola' war in Indonesia
Pepsi declares 'cola' war in Indonesia
JAKARTA (JP): After some years of absence in Indonesia, Pepsi- Cola International (PCI) yesterday declared cola war on the "real thing."
Lance Tanaka, president of PCI for the Asia-Pacific region, told a press conference here yesterday that Pepsi was geared up to increase its share of the country's carbonated drink market from less than five percent now to 35 percent within the next five years.
Sung Il Lee, PCI's Asia-Pacific marketing director, expressed his optimism about reaching the target. PCI, known as PT Pepsi-Cola Indo Beverage, the joint venture between PCI and the Salim Group, has prepared innovative marketing strategies, he added.
He said that this weekend Pepsi will start a massive advertising campaign for its main brands, such as Pepsi-Cola, Pepsi Max, 7UP and Miranda Orange, on the five local private television stations -- RCTI, SCTV, TPI, ANteve and Indosiar. The last belongs to the Salim Group.
Pepsi had previously been franchised to the Mantrust Group in 1987 but the group, faced with huge debts in the early 1990s, then sold their franchise license to the Salim Group in 1993.
Evaryanti Hutapea of the Salim Group said that her group has a 51 percent stake in Pepsi Cola Indo Beverage, with PCI holding the rest.
She also cited Pepsi Cola Indo Beverage's investment of some US$17 million in two bottling plants in Semarang, Central Java and in Cikampek, West Java.
The plant in Semarang, with an annual capacity of over 60 million bottles and cans, started its commercial production last year. The other one in Cikampek, with an annual capacity of 250 million bottles and cans, will come on stream at the end of this year, with an initial production level of 50 million bottles and cans.
Competitor
Coca-Cola International, Pepsi-Cola's biggest competitor, launched its first Indonesian-made advertisement on Tuesday night and seemed unperturbed by the arrival of Pepsi.
"We have dominated around 90 percent of the carbonated drinks market in Indonesia. It will not be easy to compete with us," Managing Director of PT Coca Cola Indonesia John Brady said.
The absence of Pepsi-Cola in Indonesia for three years has provided Coca-Cola with more opportunities to tap the market through cooperation with franchise restaurants such as Pizza Hut and Kentucky Fried Chicken. In the United States, home to both Colas, Pizza Hut serves only Pepsi.
Coca Cola, which has been sold in Indonesia since 1932, now has 12 bottling plants and over 600,000 retailers, according to Coca Cola's Public Relations Manager Jannus Hutapea.
Although the competition from Coca Cola will be very tough, Lee said, Pepsi will be able to expand its market given the large potential market of carbonated drinks in the country.
"For carbonated drinks, the per capita consumption in Indonesia is only around 10 servings (per year) -- one serving is about eight ounces or average size of glass," Lee told The Jakarta Post. "It is very small compared with its neighboring countries like Malaysia, Singapore and the Philippines."
Carbonated beverage consumption in Malaysia has reached 70 servings per person per year, in Singapore 170 and in the Philippines 65. In the United States the number goes as far as 350 servings per person per year.
In Indonesia, the situation is a bit different because the beverage market is still dominated by bottled water and packaged/bottled tea, said Lee.
"But we believe that the experience and expertise of the Salim Group on local markets will benefit us tremendously in tapping and changing the beverage market," Lee said. (als/rid)