The Golden Challenges For Coca-Cola

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Inca Kola

The soft drink Inca Kola is consumed across all social classes in Peru. It is very sweet, with flavors hard to discern. First-timers might find its color and taste extreme and most people will say its bubblegum flavor. Since the yellow-gold beverage was introduced 80 years ago, it has been a source of national pride.

The brand’s success has been highlighted by the Wharton School of Management at the University of Pennsylvania, in an essay called “Branding Lessons from Inca Kola, the Peruvian Soda That Bested Coca-Cola” The essay states: “The success of Inca Kola also reflects the uniqueness of Peruvian consumers, who tend to have very strong ties to products that they associate with personal and national identity.” Inca Kola is among a few privileged beverages that are more popular at home than Coca-Cola, the biggest player.

In 1999, Coca-Cola knew some changes had to be made and in order to gain some market share Coca-Cola purchased 38.5 per cent of Inca Kola shares for an undisclosed sum, reported by Wharton to have been $200 million, and creating what Coca-Cola’s executives now call a “strategic alliance”. The Giant Coca-Cola is known for making strategic alliances or even more so for buying out their competition. The US group has subsequently bought a further 10 per cent of shares without voting rights.

Now 15 years since the first purchase of shares in 1999, Inca Kola continuous to outsell Coca-Cola in Peru, with 30 per cent of the market against just over 20 per cent for Coke. About 90 per cent of Inca Kola is sold at small, independent shops and economists believe the continuing success of the beverage is due to meaning of the soft drink to Peruvians.

Coca-Cola might be the biggest player in market, but still faces challenges when doing Business in different countries. Changing consumer preferences, increasing health consciousness, rising obesity concerns, possible new taxes on sugar-sweetened beverages and growing regulatory pressures are not only affecting sales of Coca-Cola but also other carbonated beverages makers such as PepsiCo. In attempts to accelerate growth, Coca-Cola Brand has increased marketing investments and is driving packaged and product innovation to boost volume. In Peru Coca-Cola will continue to invest in shares to better capture the market that currently prefers to drink a local beverage that defines who they are and where they are from.

“Knowing how proud Peruvians are of their country, Coca-Cola became the official sponsor of the Peru’s National Soccer team in 2012.”

 

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