Coke Dumps Goa Bottler, Pepsi Rushes To Ink Deal

In the first signs of an increasingly aggressive cola battle to be fought in the country between Coca Cola and Pepsi, Coke yesterday announced the non-renewal of the franchise contract of its Goa bottler who was immediately snapped up by Pepsi as its franchisee in the region.

The Goa bottler, part of the Timblo family which owns the Cedade-de-Goa resort hotel in the state, will start bottling for Pepsi from Nov 23, a day after his current contract with Coke expires.

Pepsi, which had earlier wrested away another Coke bottler, Gujarat Bottling Company, only to be mired in litigations over the buy out, was more careful this time around, and signed the bottler only after Coke conveyed its decision to the Timblos.

 

Under the franchise contract, Pepsi, for the first time, has agreed to share its COBO (company owned bottling operations) territories with a franchisee bottler by allowing the Timblos to sell in six districts of north Karnataka and three districts of south Maharashtra. These areas will be shared by Dempo, Pepsi's existing Goa bottler.

The non-renewal of the franchise agreement of its Goa bottler reinforces Coke's strong position vis-a-vis its franchisee bottlers in the country whose contracts come up for renewal in 1998-99.

Bottlers perceive the threat of non-renewal of franchise contracts as the ace up Coke's sleeve in its attempt to buy them out and set up a unified bottling network under the umbrella of its subsidiary, Coca Cola South Asia Holdings, which has obtained government permission to set up 100 % bottling ventures in India.

In a press statement, Rahul Dhawan, spokesperson for Coca Cola India, said: "it was apparent that the Goa bottler was not managing the market effectively. The share of our brands have dropped to approximately 30 per cent due to the bottler's lack of responsiveness to the market". Coca Cola India will begin its company operations in the region immediately, the release added.

A Pepsi spokesperson said the Timblos were one of the best bottlers in the Coke-fold, and had 65 per cent marketshare in Goa as against 30-35 per cent controlled by Pepsi.

Under the franchise contract, Pepsi, for the first time, has agreed to share its COBO territories with a franchisee bottler by allowing the Timblos to sell in six districts of Karnataka and three districts of south Maharashtra