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While there is high potential for the volume growth of carbonates in emerging countries, economic inequalities have made it difficult for higher priced beverages to reach all consumers. This is especially true in the developing countries of India, Indonesia, Malaysia and the Philippines, where over 40% of consumers earn less than 50% of the average gross income of citizens aged fifteen or older. In these markets, carbonates are sought after, but remain a luxury that many cannot afford. To that end, companies like Coca Cola and Pepsi have found success in offering smaller cans and bottles at very low prices. These single serve units are often higher priced in terms of price per litre when compared to multi-serve products, but can be offered to low income consumers at a much smaller unit price – thereby increasing market penetration and broadening the reach of their beverages. As the economies of these countries grow, however, products like Coke’s Mismo
PET bottle in the Philippines blueprint a path for increased value, while still maintaining relatively low price points.

Small packaging sizes dominate consumption

India, Indonesia, Malaysia and the Philippines accounted for 28% of Asia Pacific’s 5.1 billion litre off-trade carbonate volume growth from 2007-12 and are expected to contribute 55% of the region’s expected 3.5 billion litre carbonate growth from 2012-17. A key to the historic performance of carbonates in these countries has been the proliferation of smaller, cheaper pack sizes.

India, Indonesia, Malaysia, and the Philippines Carbonates Packaging by Size, 2007-12

Source: Euromonitor International

As demonstrated by the chart above, beverage packaging under 500 ml dominates sales in these countries. Compare this to Mexico where sales of 501-1000 ml containers outnumber sales of both 101-300 ml and 301-500 ml containers, and the US where 101-300 ml containers account for less than 3% of carbonate packaging.

The key to the success of these products in emerging Asian countries is unit price. A 300 ml can of Coca-Cola in India retails for 12 rupees or US$0.19. In Indonesia, a 330 ml can of Pepsi Twist is US$0.46. And a 325 ml can of My Cola is US$0.34 in Malaysia. Perhaps most indicative of this trend of offering small serving sizes to appeal to lower income consumers are 200 ml returnable glass bottles.

Pinay Ricamora 580.jpg

Image courtesy flickr user Pinay Ricamora

Coca-Cola engineered an entire branding campaign behind this package size in the Philippines. Priced at a mere 5 Philippine Pesos (or US$0.12), Coca-Cola called the drink “Sakto”, the Filipino word for “exactly”. It was marketed directly to consumers who had very little pocket change and wanted “the exact amount of Coke at the exact price”. This particular packaging has performed well for all carbonate manufacturers, with almost 2.5 billion glass bottles sold in India, Indonesia and the Philippines in 2012.

PET bottles can increase value

While the sale of 300 ml cans and 200 ml glass bottles have helped increase market penetration, there is room for premiumisation amongst growing economic classes in these countries. Sakto may have been “exactly” what some consumers wanted to drink, but it was often ridiculed by some Filipino consumers as “exactly” what poor people could afford. Students, one of Coca-Cola’s primary targets for Sakto, viewed the product as a statement of poverty and would be wary of purchasing it amongst friends. In essence, there existed a demand for a premium economy product.

When FEMSA group purchased Coca-Cola’s interest in the Philippines, many assumed that the Latin American bottling giant would address some of the inefficiencies of Coca-Cola’s bottling operations in the country. Sakto was thought to be one of those issues due to its low price tag and returnable glass bottle model. To that end, Coca-Cola launched “Mismo” this summer.

mismo incrediblethots 580.jpg

Image courtesy flickr user incrediblethots

Similar to Sakto, Mismo means “specifically” and features a small serving size. However, unlike Sakto’s, Mismo contains 300 ml of Coca-Cola, comes in a re-sealable PET bottle, and costs double what vendors charged for Sakto (10 Philippine Pesos or US$0.23). To promote the new product and highlight the target audience, Coca-Cola held an event across three Manila malls called “Ito Na” (meaning “this”) and invited members of the US television show Glee (popular amongst Filipino young adults) to join Coca-Cola ambassadors on stage unveil the new product. The event drew over 30,000 people to the three area malls and the video of the event was uploaded to YouTube where millions of Filipinos watch videos daily. Through this promotion, Coca-Cola was not only able to double the unit price of Sakto while including only 50% more product, but it created a premium product that is both affordable and popular amongst teens.

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