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Quenching your thirst on road to democracy: Coke, Pepsi wage war in long-isolated Myanmar

A Myanmar woman takes a can of Coca-Cola from a shelf at a supermarket in Yangon, the capital city.
A Myanmar woman takes a can of Coca-Cola from a shelf at a supermarket in Yangon, the capital city.Soe Than Win / AFP - Getty Images file

YANGON, Myanmar — Consumers in long-isolated Myanmar are getting their first taste of globalization — and finding it is sweet, fizzy and comes served in a can.

An end to international sanctions after decades of military rule has brought Coca-Cola and Pepsi back to the country, which is also known as Burma, triggering a soft-drink stand-off featuring the giants as well as several local brands.

Although it's been just five months since Coca-Cola started production in Myanmar after a 60-year absence, the brand has already painted much of Yangon red and white. 

Until recently, Myanmar, North Korea and Cuba were the only countries where Coke didn't have an official presence. Wealthy people in the capital could find illicitly imported Coke in upmarket hotels and restaurants, but generations of ordinary folk had grown up without ever tasting its still-secret recipe. 

Moon, 22, encountered her first swig of Coca Cola just five months ago when she moved from a small village outside Mandalay to work in one of Yangon's most exclusive hotels. (Moon, like many in Myanmar, goes by just one name). 

"I like it very much. When I was young I had only tried Blue Mountain [a local brand] and I found it too sweet. Also I like the thin cans that Coca-Cola have, not like the thick old-fashioned ones."

Outside Yangon's popular Bogyoke Market, soft-drink vendor Win has been selling sodas to customers and stallholders from a cooler for the past 20 years. Such is the demand for Coca-Cola that he has now stopped selling local brands.

"I'd say about 80 percent of people prefer Coca-Cola and 20 percent Pepsi or other brands," he said.

Coca-Cola usually sells for about 400 kyat (around 40 cents) a can, which is comparable with local brands.

One of his customers Yewin, 43, who has a store inside the market, said he remembers paying 1,500 kyat (about $1.50) for an illegal imported Coke in the mid-1980s.

"Now it is much more affordable and I much prefer it," Yewin added. "Star Cola [another local brand] is far too sweet. It is not good for children. I only give my daughter Coca-Cola."

However, Myanmar's indigenous cola producers are refusing to give up. They are waging a David and Goliath battle of the bubbles to remain the drink of choice in the newly opened country.

And while conventional wisdom suggests Blue Mountain and Star stand little chance against the might of the American giants, Coca-Cola and Pepsi face challenges in getting their message across to generations of consumers unused to the language of global advertising.

That has led to an unusual marketing strategy from Coca-Cola.

Rommel Fuentebella, Coca-Cola Myanmar's head of marketing, said the company had "delved into the archives" in search of ideas.

"We ended up getting inspiration from Atlanta in 1886," Fuentebella said. "When Coke was first introduced in Atlanta, the marketing strategy focused on what Coca-Cola tasted like – it simply described the unique flavor of Coca-Cola. We decided to use two words to form the core of the Myanmar campaign — 'delicious, refreshing' — which now appear, in the Myanmar language, on all locally produced products and advertisements.

"We also replicated another marketing initiative from the early days — free samples of icy cold Coca-Cola. We regularly host sampling events at festivals and gathering places in Myanmar, for it's a great way to get people to taste the product."

Although Pepsi started importing into Myanmar slightly before Coca-Cola in the wake of international sanctions being lifted last year, Coke has pushed ahead in terms of local production with two plants now operating in the country. Pepsi is still relying on imports but plans to start domestic production soon. 

Jeremy Rathjen, vice-president at Myanmar-based research and financial consultants Thuraswiss, said Pepsi had not yet managed to achieve Coca-Cola's level of brand awareness. 

"Although Coke was not here officially for such a long time, it was still being brought into the country on the black market, so it wasn't completely unknown ... and that has given Coke an advantage," he said. "Coke also seems able to tap into local taste better — promoting Coke as going with a certain local food for example — and are going to roll out labels in the Myanmar language with the local script."

So if even Pepsi is struggling to keep up with its rival, how can local brands compete against Coca-Cola?

Dr. Sai Sam Htun is president of the Loi Hein Group, which produces Blue Mountain Cola and other beverages that in June this year accounted for an estimated 30 percent of Myanmar's soft-drink market. Recognizing that his company will never be able to match the budgets of the global firms' sophisticated urban marketing he is focusing on the more traditional rural market.

He is optimistic that Coke and Pepsi's promotions will raise overall demand in a country where the the current soft-drink market is valued at just $100 million annually — compared with $1.5 billion in neighboring Thailand, which has an only slightly larger population and similar demographics. 

According to analysts Trefis, based on current economic growth and patterns in other countries in the region, the soft-drink market in Myanmar is estimated to reach over $500 million by 2025: a five-fold increase in just over a decade. Neither Pepsi nor Coke will release market share figures.

"I am confident," Sai said. "We're currently doing well and our market share is growing. If the multinationals come in and claim the A, B market then we will take the Cs and Ds. I hope to see a 40 percent growth next year."

He added the company is adopting modern marketing methods and both increasing and training the Blue Mountain sales force, while at the same time aiming to tap into traditional rural loyalties toward local brands.

Rathjen believes Sai's approach could work.

"In rural areas people don't understand the global brand of Coca-Cola so the local brands can be on the same level," he said.

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