In Battle for Pakistani Youth, Coca-Cola Gains Share by Cultivating Local Stars

The Coca-Cola Co and PepsiCo have long battled for supremacy in cola carbonates, both in the US and abroad. While the domestic battle has reached a ceasefire amidst declining volumes for both companies, growing demand for cola carbonates in Pakistan has reignited the rivalry in this country. Marketing to younger consumers has long been a best practice in growing brands – and both Coca-Cola and Pepsi have a long history of tapping into both global and domestic artists to appeal to this demographic. But the support of grass roots artists in countries like Pakistan is becoming increasingly important as these consumers embrace Coke and Pepsi, not as Western brands, but as global brands with a local flair.

Gap between Coca-Cola and PepsiCo closes in Pakistan

As both PepsiCo and Coca-Cola scramble to reverse the US decline of the carbonates, the heyday of the cola wars in the 1980s and 1990s may seem a distant memory. However, strong growth of cola carbonates in Pakistan has seen these two cola giants renew their battle for soda supremacy, but with Pakistani rather than American youth being the coveted demographic. Historically, PepsiCo has been the dominant carbonates manufacturer in Pakistan, buoyed by the regional ban of Coca-Cola products across many Muslim states. Recently, however, Coca-Cola’s heavy investment in the country is paying dividends. In 2011, Coca-Cola surpassed PepsiCo as the nation’s off-trade volume leader, but PepsiCo maintains a healthy lead in terms of off-trade value sales, buoyed by its more than 40 years of offering its products through independent bottlers. Coca-Cola has used lower price points on smaller packages to attract a wider range of consumers. It is also seeking to benefit from its momentum by opening manufacturing plants in Karachi, Multan and Islamabad in the next 18 months. Not to be outdone, PepsiCo has refused to rest on its laurels, growing its overall volume share in each of the last two years.

Coca-Cola and PepsiCo’s Shares of Carbonates in Pakistan: 2008-2013

Source: Euromonitor International

While this battle is both too close and too early to call, Coca-Cola and PepsiCo enthusiasts appear to be split along geographic lines. Euromonitor International analysts estimate that PepsiCo is dominant in the southern regions of Sindh and Balochistan, where consumers have grown accustomed to the taste of Pepsi and are reluctant to switch. Conversely, in Punjab and other northern provinces, consumers are embracing Coca-Cola’s flavour, due to both competitive pricing and effective marketing. Geographic split aside, both Coca-Cola and PepsiCo are actively positioning their products towards Pakistan’s youth, a demographic that still embraces cola flavours and will become increasingly important to Pakistan’s future.

Youth marketing amidst media boom

Similar to how Coca-Cola and PepsiCo tapped younger consumers through actors, athletes and musicians, the companies are turning to Pakistani popular culture for their spokespersons. Stateside, PepsiCo has been the more aggressive employer of celebrities to endorse its brand, signing artists like Michael Jackson, Madonna, Britney Spears and, most recently, Beyoncé to endorsement deals. Similarly, Coca-Cola has had deals with Bill Cosby, Michael Jordan, Paula Abdul, 50 Cent and Lebron James. Rather than rely on these artists solely for global marketing campaigns, both PepsiCo and Coca-Cola are spotlighting local celebrities in emerging markets, Pakistan included. The recent boom in colour TV households (which have nearly doubled since 2003) and adspend on multimedia marketing (up nearly 400% over the last decade) in Pakistan has made these marketing campaigns more important. However, tapping into local stars may no longer be enough. Considering that almost 55% of Pakistan’s population is aged under 25 years, these efforts to attract new youthful consumers have huge importance.

Television impact continues to grow in Pakistan

Source: Euromonitor International

Cultivating local stars

PepsiCo’s advertising strategy focuses on local artists. It is a long-time sponsor of Pakistan’s national cricket team and has also tapped into local celebrities like musician Junaid Jamshed and Lollywood actor Reema Khan. However, Coca-Cola has gained prominence with Pakistani youth by helping create stars via Coke Studio, a Pakistani music television series featuring live studio-recorded music performances by local artists. The show premiered in 2008, is set to launch its seventh season in 2014 and is carried across 27 television channels in Pakistan. PepsiCo attempted to mimic this success with its Pepsi Smash web series in 2013, but it has yet to generate the same amount of consumer affection.

This strategy to cultivate local talent demonstrates the desire of local consumers to see brands support domestic cultures, and is one that could see more relevance in other markets. Coke Studio has proved to be such a large hit that similar campaigns have been launched in India, Egypt, Tanzania, Nigeria, Kenya and Uganda. In East and Southeast Asia, both regional and global brands have used Taiwanese, Japanese and Korean pop stars to promote their products, but a movement to showcase unknown talent could work as well. So before Coca-Cola and Pepsi spend millions of dollars signing the next Beyoncé or Lebron James, sponsoring programs that help cultivate stars of tomorrow may be the better path to market today.