Pepsi follows Coke to Myanmar

US beverage giant PepsiCo has signed an agreement with a local Myanmar distributor to sell its soft drinks in the former pariah state after a 15-year break – only two months after arch rival Coca Cola Company announced to re-enter the country. PepsiCo in a company release on August 8 also said it is looking for agricultural and manufacturing investments in Myanmar.

PepsiCo is the second US drink maker after Coca Cola to enter the recently opened country to quench the thirst of local consumers for foreign soft drink brands. Pepsi said it has inked a pact with local company Diamond Star, one of the largest consumer goods distributors in Myanmar, and granted exclusive rights to import, sell and distribute Pepsi Cola, 7-Up and Mirinda in the country. Under the agreement, Diamond Star will purchase and import the products from Pepsi’s Vietnam operations.

PepsiCo also said it will explore opportunities for investments in agriculture and manufacturing in Myanmar, as well as the possibility of setting up vocational training facilities.

PepsiCo chairman and chief executive Indra Nooyi noted in the release that Myanmar’s market “has great potential”.

“We are constantly looking for new growth opportunities that will put our food and beverage brands in the hands of more consumers”, Nooyi said.

However, a PepsiCo spokesman declined to clarify if the company will distribute other brands in Myanmar. Apart from its status as the second largest soft drink maker, which produces Pepsi Cola, Gatorade and Tropicana, PepsiCo is the world’s largest snack food maker with brands such as Frito-Lay, Quaker, Walkers, Doritos, Cheetos, Ruffles and many more.

On June 14, PepsiCo’s arch rival Coca Cola Company announced that it will re-enter Myanmar after more than 60 years of absence in the country. Coca Cola said it plans to establish local business relationships and work with local partners as part of the long-term economic development of Myanmar. It has already granted $3 million via the Coca Cola Foundation to support women’s economic empowerment and job creation initiatives in Myanmar. Coca Cola reportedly plans to invest around $300 million into local production in the country, though this number has not been officially confirmed yet.

Besides the iconic Coke trade mark, Coca Cola produces Fanta, Sprite, Powerade, Minute Maid, Simply, Georgia, Del Valle and various energy drinks, being the strongest products in a portfolio of 3,500 beverage brands. It is so far not clear which of these brands will make it to Myanmar, apart from Coke, Fanta and Sprite.

Meanwhile, the local drink industry in Myanmar has become worried about the return of the world’s soft drink giants as they are face-off against two of the globally most recognisable brand names in a battle for the Myanmar consumers.

Leading Myanmar drink makers such as Lo Hein Company, Myanmar Golden Star and Happy Soft Drink Company, producers of well-known domestic brands such as Star Cola, Happy Star, Crusher, Quench and Sweety, fear that consumers will turn to Pepsi and Coke as they are regarded superior products, The Irrawaddy  magazine noted.

Coke and Pepsi bottles and cans have been sold in Myanmar before, due to a buoyant cross-border trade with Thailand, for a price of up to 1,000 kyat (around $1.22 as per the new exchange rate set by the government), tenfold the price of a domestic soft drink brand and as much as a full day’s wage for many locals.

However, with domestic production of Coke and Pepsi the price is set to decrease and adapt to the local purchasing power.

“When they set up here officially, they will be able to sell for the same price or less than local drinks,” Nyi Nyi, the marketing manager of  Happy Soft Drink Company, was quoted as saying by The Irrawaddy.

“There are three ways we can go: We can sell out to Coca Cola, we can cooperate with them, or we can try to compete,” Sai Sam Tun, chairman of the Loi Hein Company, told the paper.