So now that PepsiCo is trying to repeat the trick, it would be interesting to see the ripples that it creates. In any case, irrespective of any shift in market share, a huge promotion such as this is surely going to generate additional demand for the brand.
Entering Afghanistan
PepsiCo has announced that it will set up a plant in Afghanistan which would be up next year. This will be the first time that the company will produce its drinks locally in this country. So far, people of Afghanistan had to quench their thirst with the PepsiCo drinks that would be imported from Pakistan.
The country is going through a phase of transition as foreign troops are leaving after 13 continuous years of warfare. And it is expected that eventually there would be a phase of economic development which would support higher demand for consumer products. PepsiCo is planning to be a beneficiary when that happens.
Coca-Cola had started its manufacturing here in 2006.
Asia beckons all
With Coca-Cola and PepsiCo, Inc. (NYSE:PEP) both focusing on Asian markets, it is imperative that the cola wars will heat up in the region. But, irrespective of whoever garners a higher share, the fact remains that these markets are still highly untapped.
Coca-Cola has estimated that compared to 403 servings of its products per person annually in the U.S., it is just 38 servings in China and only 12 in India. Given the fact that a lot of these countries have huge populations and are witnessing their early waves of economic development or are about to do so, their potential is huge.
During the first quarter, Coca-Cola reported revenue of around $2 billion from Eurasia & Africa and Pacific segments combined, and a total operating profit of $884 million from these regions. On the other hand, PepsiCo had revenue of $1 billion from its Asia, Middle East, and Africa segment and earned an operating profit of $184 million.
Even Dr Pepper Snapple Group Inc. (NYSE:DPS), which is more or less happy sticking to North America, is warming up to the lure of Asia. As a first step, it recently re-acquired distribution rights of its Snapple brand tea, juices, and some other non-carbonated beverage brands from Mondelez. While any immediate boost in sales is unlikely, it would be interesting to see if the company formulates a strategy for the Asian markets.
Summing up
The future of PepsiCo, Inc. (NYSE:PEP) lies in new markets like Asia. The company is already following a clear cut strategy in the region and is not letting any opportunities go by. As the investments start yielding results, these markets can be significant catalysts for future growth.
The article This Beverage Giant Has Its Eyes on Asia originally appeared on Fool.com and is written by Eshna De.
Eshna De has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and PepsiCo. The Motley Fool owns shares of PepsiCo. Eshna is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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