The world (of Coke and Pepsi) is not enough in emerging markets...

With global volume growth driven by developing nations, where consumer spending power continues to grow, Euromonitor International beverage analyst Jonas Feliciano noted the shift in these areas from unpackaged beverages such as water, lemonade and fresh juices to packaged drinks.

But proliferating local brands and familiar flavors (in local markets) was a trend that global manufacturers could not ignore, Feliciano said, noting their need to tap sub-brands and compete with local players.

“In the past, choosing megabrands like Coca-Cola or Pepsi meant joining a global culture,” ​Feliciano said. “But, manufacturers are learning that today’s consumers are starting to make choices based on regional taste instead of just global identity.”​

Master Kong’s iced tea​

Mass appeal was still valuable and profitable for large companies, Feliciano explained, but new strategies were also winning out that targeted specific individuals or groups, with gender-specific launches or offerings to reflect specific popular cultures or lifestyles.

“Consumers in China, for instance, are now able to choose from, not only Coke and Pepsi, but Hangzhou Wahaha’s Future Cola, Master Kong’s Iced Tea or Jiaduobao, a canned RTD herbal tea that sold almost 1.4bn liters in 2012 compared to 2.5bn for Coca-Cola,” ​Feliciano said.

In the US Dr Pepper’s ‘exclusionary market strategy’ for Dr Pepper 10 – with gun-metal macho man imagery and edgy ‘it’s not for women’ tagline – fed into the concept of ‘drink as identity’, the analyst noted.

This approach had also fed Dr Pepper’s most recent advertising campaign, Feliciano said: “The 2013 launch of ‘/1’ or ‘one of one’ centers on the concept that ‘each one is unique’, and spotlights both celebrity and everyday people for their individuality.”​

Coca-Cola enters Russian kvass​

Whether one considered kvass-based drinks in Eastern Europe, guarana carbonates in Latin America or lemon-lime drinks in India, Feliciano said that big beverage players had realized the potential of beverages that were similar to unpacked varieties that epitomized local culture.

“The Coca-Cola Company, in particular, realized the potential in 2008, when examining the company’s performance in Russia,” ​the analyst said.

Local rival Ochakovo MPBK ZAO quickly stole market share from Coca-Cola with Kvas Ochakovo – a packaged kvass popular with many Russians, he explained; kvass is a fermented soft drink made from rye bread.

“In response, Coca-Cola developed Kruzhka I Bochka, their own take on kvass. Though still nascent, the product grew every year and reached almost 40m liters sold in 2012,” ​Feliciano said.

On its website, Coca-Cola Russia describes the drink as a "traditional Russian kvass with a unique taste and aroma of golden brown rye bread"​.

“Add this to the 1bn liter performance of their flagship Coca-Cola brand, and the company remains entrenched as the leader of carbonate sales in Russia," ​Feliciano said.