Coca-Cola and Pepsi slash selling prices to knock down domestic rivals
Coca-Cola and Pepsi slash selling prices to knock down domestic rivals
Coca Cola and Pepsi are dominating the fizzy soft drink market, while Tan Hiep Phat controls the still drink market, thus creating a balance in the playing field. However, the product price reductions and the announcements by both Pepsi and Coca Cola are likely to make big changes to the market.
“Pushing up the investments to regain the lost market shares” was the commitment made by the President of a soft drink company when he took the office.
The company is believed to be the oldest soft drink manufacturer in the Vietnamese market. However, the mismanagement, plus the limited resources, the brand has been lost into oblivion. It has been operating at a moderate level, targeting the rural market with low cost products and accepting low profits.
However, just two months later, the president changed his mind, temporarily putting aside the dream of bringing the company back to the golden age.
What made the president change his mind was the market report his business workers sent to him two weeks after he took the office.
The report said that Coca Cola and Pepsi both have slashed the selling prices of many products; including the 330 ml glass bottled products, which were the advantageous product of his company.
A box of 24 Pepsi bottles has seen the price drop from VND66,000 to VND46,000. Meanwhile, Coca Cola has promised to give six free bottles to those who buy one box of products.
The price reductions vary, depending on the regions and the product lines. However, the sharper price reductions have been applied in the areas near HCM City, including the east or the west of the southern region/
Pham Viet Anh, Chair of Left Brain Connectors, a consultancy firm, said this could be just a short term strategy applied by the two big drink manufacturers which aims to quickly clear the inventories or help sales agents boost sales. However, he also thinks that the two big guys are following a long business strategy of eliminating glass bottled products.
Anh seemed to give a reasonable explanation. Since glass bottled products just amount to a small proportion in the total turnover of both Pepsi and Coca Cola, they might think of stopping making the products.
Do Thanh Nam, CEO of Win-Win, also a consultancy firm, glass bottled products have big disadvantages for the transportation, while the low selling price leads to the low profit margin.
However, no matter what Pepsi and Coca Cola target when taking such steps, their move has made a strong collision to the domestic market, which is now seething.
Nguyen Dang Hien, General Director of Tan Quang Minh, the company which owns Bidrico soft drink brand, has also noted that slashing the selling prices for the glass bottled products could be seen as the blows on the Vietnamese brands like Bidrico or Chuong Duong.
The fizzy glass bottled soft drink mostly develops in rural areas thanks to the low prices. The market has been dominated by the Vietnamese companies, which can offer cheap products.
In the past, the foreign big guys once tried to conquer the rural market by slashing the selling prices for plastic bottled products. However, they did not succeed, because their products, despite the sharp price reductions, were still more expensive than glass bottled products.
vietnamnet
