Soft drink majors slug it out

Kathmandu, April 12:

As summer temperature soars and people gear themselves up to face the scorching sun, for soft drinks manufacturers it is the best time of the year. It ushers in the peak season when sales touch new heights depending upon the marketing gimmicks of each player.

While the activity level of soft drink majors like Coca Cola and Pepsi in Nepal may not match up to that in India, the two are certainly beginning to flex their muscles here. Having gone through tough times in the recent past, the production units of the two beverage makers are reportedly back to working at high pace. But insiders concede it is not what it used to be.

The 60,00,000 case industry of 2005 has taken a beating thanks to labour problems and repeated strikes in the country. While the last six months have been particularly bad, both Bottlers Nepal Ltd and Varun Beverages (sole franchisees of Coca Cola and Pepsi, respectively in Nepal) are looking at ramping up their sales.

According to sources, while Coca Cola remains its market leader position considering the size

of its two plants at Bharatpur and Balaju in Kathmandu, Pepsi has slowly and unwittingly been eating into its share in the last few months.

“Coke’s market share, which stood at 85 per cent two years ago, has come down to an alarming 65 per cent today,” pointed out an insider.

The major reason behind this changing equation is being attributed to the acrimonious labour situation that Coke has been facing for over last one year.

Even as the issue of racial discrimination that Bottlers Nepal Ltd had been grappling with for some time remained unresolved, it has been embroiled into fresh trouble over labour lay offs in December 2006.

As a result, the two plants closed down for more than two months causing a daily loss of about one million rupees.

Labou forms a crucial component of the beverage industry requires manual collection of bottles, cleaning and loading or unloading of cases.

While Pepsi also faced labour problems leading to a closure of its factory for a short period, it reportedly resolved the issue within a fortnight. Moreover, Pepsi claimed to be on a better footing considering the smaller size of the plant and the fact that all the employees are already permanent.