Cola price war goes to another level; Coke, Pepsi slug it out

Mohini Bhatnagar
16 April 2003

Mumbai: Coca-Cola India, some time back, had initiated the first cola price war by launching small 200ml packs priced at Rs 5. Now Pepsi India has fired the first salvo and lowered the price of its 300ml pack from Rs 8 to Rs 6.

Industry sources say Coke India was able to reduce its prices from Rs 7 to Rs 5 last year because it acquired a big glass bottle manufacturing facility, which enabled it to offer smaller bottles at reduced prices.

Pepsi, on the other hand, valiantly though it is trying to keep pace with Coke's price initiative, lacks such a facility and is lagging behind in the 200ml segment.

Pepsi's main concern at the moment is to try and slow down Coke's penetration of the market with its 200ml packs and has chosen to focus on the 300ml segment as it feels that with the advance of summer, consumption of colas is bound to go up and 300ml packs will be more popular. Factoring this in, Pepsi first brought down the price of the 300ml pack to Rs 8, and then to Rs 6.

Pepsi is targeting its 300ml packs at high-consumption markets like Delhi and Mumbai for the coming summer months when demand will start rising. Alongside the 300ml packs, the company is also marketing 200ml bottles priced at Rs 5. The new price points are being communicated to the consumers through printed banners, truck-backs and point of sale merchandise.

Industry analysts say the strategy will work out if 300ml at Rs 6 looks more attractive than 200ml for Rs 5. Otherwise Pepsi may end up making huge losses as it has already spent huge amounts on Cricket World Cup this year.