Surge in Syria
Syria’s soft drinks market is experiencing record growth, expected to surge 17-18% this year compared to last year’s 12% growth, and Pepsi’s market share continues to grow after just over a year of operation in the country.
Syria took tentative steps last year to open up its drinks industry to foreign competition, with Pepsi and Coca-Cola taken off a blacklist and foreign mineral water imports allowed for the first time. Pepsi and Coca-Cola were blacklisted along with other US and Western firms more than 50 years ago by the Damascus-based Bureau for the Boycott of Israel, which is connected to the Arab League.
Pepsi, which is franchised to Syrian drinks and industry giant Joud, launched in August of last year with an aggressive marketing campaign to overcome any possible anti-American sentiment associated with the brand. “We didn’t give it a chance to be a foreign brand. We made it known it was bottled here, and used the same marketing strategy we did for 7-Up,” said Lilas Rabbat, a Joud marketing manager.
Pepsi’s entry into Syria’s $100 million market has taken the sector by storm, driving growth by up to 6% from last year’s 12% growth and 2004’s 6.5% growth, according to IMES.
Highly fragmented
The soft drinks market is highly fragmented between five major brands and around 100 smaller brands, usually of the returnable glass bottle variety, which account for around 10% of the market.
The market is divided between Cadbury-Schweppes/Salsabil at 30%, which has five bottlers and includes brand Canada Dry, Ugarit at 15%, Master-Cola at 8%, and RC Cola with 4% market share.
But due to strong sales of Pepsi and 7-Up, Joud is rapidly claiming the lion’s share of the market, expected to increase from 47% market share to 50% by year end, according to Rabbat.
Coca-Cola, on the other hand, is not faring as well in the Syrian market, despite being taken off the blacklist. With no bottling plant, Coca-Cola is imported from Jordan and Lebanon, and sales account for less than 2% of the market.
Affecting sales is the price of a can of Coke, which sells for 20SP ($0.40). “Price is very important here,” said Rabbat, where low-level government employees earn as little as $100 a month. Cans of Pepsi, like any other soft drinks, sell for 15SP ($0.30).
Management problems with the Coca-Cola franchise have also affected a potential launch. Coca-Cola was run by the son of the recently disgraced former Vice President Abdel-Halim Khaddam, who is now in exile in France following an outburst against President Bashar Assad at the end of 2005. His son has reportedly sold his shares in the franchise to a Saudi investor. Coca-Cola is expected to launch local production in the coming months, although the company would not confirm this.
“If Coca-Cola starts manufacturing, they are not to be underestimated. They have learnt from Pepsi’s experience how to market here. They will copy us,” said Rabbat.
But as people associate Coca-Cola with America more than Pepsi, Rabbat points out, Joud is at a marketing advantage.
2001 boycott campaigns throughout the Arab world in a show of solidarity with the second Palestinian uprising saw Coca-Cola lose market share and Pepsi control 75% of the Middle East market, which it has retained and expanded with its presence in Syria.
‘Give me a Pepsi’
Pepsi’s strong marketing in Syria has also had other impacts. “A year ago, people would have said, ‘Give me a cola,’ but now they say Pepsi. They say it tastes better than the others,” said shopkeeper Manaf Abdulghani.
Syria’s mineral water market is also diversifying. Until last year, bottled water was controlled by the state, with 51% of market leader Balkein owned by the government. With the government allowing foreign water imports for the first time, there has been a deluge of players entering the market from Lebanon, along with Nestle Pure Life from Jordan and Masafi from the Gulf.
