Publish in Perspectives - Wednesday, May 27, 2015
In India, Peru's Big Cola producer Aje is targeting mainly the 'bottom of the pyramid' for whom Coke and Pepsi are expensive.
How 'Big Cola' from Peru is an inspiration for Indian entrepreneurs.
BY R. VISWANATHAN
There is not a single recognizable Indian cola drink company left in the market after the sweeping entry of the big giants Coke and Pepsi. While the Indian companies have surrendered or sold themselves off without a fight, Aje, a cola company from Peru a far-off country from Latin America has had the audacity to bet on India. This small company with 'Big Cola' brand has succeeded in finding a niche market in India.
Aje entered India in 2010 and has set up a bottling plant in Patalganga in Maharashtra. They produce 30 million liters and have a 8 percent share of the market in Maharashtra state. They plan to expand to the rest of India and set up 20 plants. They propose to add fruit juices, bottled water and energy drinks, too, later. The company employs four hundred Indians and five Peruvians.
Big Cola is about 20 percent
cheaper compared to Pepsi and Coke. Aje cuts the costs of production and
distribution to the minimum. Aje is not in the multicrore game of cricket
sponsorship. They run a modest marketing campaign with the slogan "Chhodo
Purana, Badla he Zamana…!".
Aje is targeting mainly the 'bottom of the pyramid' for whom Coke and Pepsi are expensive. They market themselves as a ' fair price' drink to low income consumers and talk about ' democratization of consumption.' With this strategy, they see a significant opportunity in the large and growing low income population segment of India. Aje has worked its way up and has put Big Cola in the shelves of Big Bazar, Reliance, D mart, Metro, Tesco and other chain stores.
The credit for the success of Aje in India goes to Mr Clever Pantoja Cadillo, the head of the company in India since 2009.
He came with some Asian experience after his stay in Thailand. But he found India to be very complicated and challenging. In the beginning, when he was searching for land for the plant, he was taken for a ride by the Indian real estate agents. Mr Pantoja, who lives in Navi Mumbai with his family, has now adapted well to Indian culture and has learnt how to do business in India. Although he knew that Gujarat offered more incentives and has lower taxes he chose Patalganga, between Mumbai and Pune which are huge high density population centers.
Aje's origin is an interesting story. During the eighties, Peru became unsafe due to the terrorist war unleashed by the 'Shining Path' ( Sendero Luminoso) guerrillas. The trucks of Coke and Pepsi could not deliver to the interior areas controlled by the guerillas. The Ananos family saw a business opportunity and started producing cola drinks in Ayacucho, a small town which was a major center of guerrilla activities. They founded Aje in 1988 and established their national presence in Peru by 1997.
Aje embarked on its international foray in the late nineties. It entered Venezuela in 1999, Ecuador in 2000, Mexico in 2002, Central America in 2004, Thailand in 2006, India, Vietnam and Indonesia in 2010 and Brazil in 2011. Aje's products are now sold directly or through agents in over 20 countries in Latin America, Asia and Africa. Besides its flagship brand Big Cola, the company has also got branded products of fruit juice, instant tea, bottled water, energy and sports drinks as well as beer. The Ananos family owns 100 percent of the shares and control of the company.
Aje is the fourth largest producer of carbonated soft drinks and the tenth largest soft drink company (by sales) in the world. It has 30 plants around the world and is vertically integrated. Its annual sales are 3 billion liters and it has an ambitious goal to be among the top 20 multinational companies by 2020.
Aje does not consider itself as a competitor to Pepsi and Coke. They are content to be categorized as a B brand. Their focus is only on the emerging markets where there is growing number of lower middle class.
Aje's global ambition has been boosted particularly by their success in Mexico, one of the top soft drinks markets in the world with a high per capita consumption of carbonated drinks. They fought their way through the intense warfare between Pepsi and Coke and managed to get a sizable share of the market. With this success, they have gone on to get a double digit percentage of the market of Indonesia too. After conquering these two large emerging markets, Aje is confident of its growth in India too.
The success of Aje is a lesson to the Indian entrepreneurs who face challenges from multinationals. It is also an inspiration for those Indian companies who aspire to go global and find niche markets for their products.
R. Viswanathan is a Distinguished Fellow of Latin America Studies at Gateway House ( Indian Council on Global Relations ). From 2007 to 2012 he served as India’s Ambassador to Argentina, Uruguay and Paraguay. That followed three years as Head of the Latin America Division in the Ministry of External Affairs of India and as Ambassador to Venezuela (2000-2003) and Consul General of India in Sao Paulo (1996 to 2000).