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South Africa to face a cola war

South Africas cola industry has not reached full capacity, but when it does, beware of friction between Coca-Cola and Pepsi, warns Karen Harverson

While Gauteng-based Pepsi is planning to set up at least five new bottling plants by the year 2000 in its bid to go national, market leader Coca-Cola may be looking to consolidate its franchised bottling operations.

Says Peter Laycock, regional manager of Coca-Cola in South Africa: There may be changes within the ownership of certain operations.

He says the operation of its 34 bottling plants is highly capital intensive as the plants are not running at full capacity. Were always looking at ways to reduce costs and there may be an opportunity to consolidate operations and perhaps set up large warehouses close to the market.

Pepsis marketing and new business development manager Alan Hunking says despite the fierce competition between the two beverage manufacturers, South Africa has not yet experienced a cola war.

The so-called war is only really likely to get started once Pepsi goes national expected to happen in late 1997. Hunking says plans for new bottling plants will be announced later this year.

At present, the company, through its joint venture with bottler and distributor New Age Beverages, operates only in Gauteng although a new plant at an estimated R100-million is being built in KwaZulu-Natal and is due for commissioning in the third quarter of this year.

Hunking estimates between five and 10 new bottling plants will be built in South Africa by 2000 and says the company is also in discussion with a number of Southern African countries to build plants there.

Coca-Cola last week announced a 13% increase in its Africa Group operating income and an increase in the continents unit case volume sales of 9% for 1995.

South Africas R6,5-billion carbonated soft drink market is small compared to its major trading partners but there is potential for growth in terms of per capita consumption of soft drinks.

South Africans consume an estimated 170 eight-ounce soft drink servings a person a year compared with the United States where almost 700 servings a person are consumed a year.

A beverage analyst estimates Pepsis total market share at around 8%. In specific areas like Soweto where aggressive marketing has taken place, Pepsis share could be as high as 45%.

He believes with Pepsi s new plant coming on stream, its share of the market could level out at about 20% in two to three years time, with Coke dropping from its present 85% to about 75%.

But while cola makers vie for market share, many South Africans remain loyal to tea, with some 19 000 tons of fresh tea consumed a year.

Tea Council of South Africa chairman Michael Cherry says consumption per cup has increased, but the number of tons consumed has remained stable. The trend towards tea-bagged tea means less tea is used to make a cup than previously.

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