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Pepsi to take over major Goa bottling unit

Sandesh Prabhudesai in Panaji

Pepsi Foods Limited is likely to take over the bottling operations from its three-year-old franchisee in Goa and Karnataka, the House of Timblos.

Surprisingly, the proposal in this regard has reportedly been sent by the Timblos, whose Fomento Group is a leading mining firm in Goa and owns Cidade de Goa, a major five-star resort at Dona Paula, near Panaji.

Prashant Timblo, managing director of the Goa Bottling Company in Goa and Nectar Beverages Limited in Dharwar, however, is still non-committal on the issue. Although he hesitated to come on line to confirm it, his office did not deny the news.

The proposal seems a little surprising because the GBC had overnight shifted its franchisee operations from Coca-Cola to Pepsi three years ago when the Atlanta-based multinational had forcibly tried to take over their bottling operations in Goa.

As the tourist state marks the second highest per capita soft drink consumption in India, the marketing war between both the soft drink MNCs in Goa sometimes takes non-profitable turns, with the sole aim of retaining their market shares.

Among the two MNCs, Coke is still having an upper hand with 56 per cent market share. But with the GBC shifting over to Pepsi in November 1997 -- which had forced Coke to import its bottles from outside Goa till recently -- Pepsi managed to increase its share to almost 44 per cent from a mere 30 per cent three years ago.

The GBC also handles Pepsi's marketing operations in the three Konkan districts of Maharashtra. Besides its own plant with an annual production capacity of 3.5 million cases, the Timblos market bottles from Universal Beverages Limited, a franchisee owned by the House of Dempos, having a capacity of 1.8 million cases.

The 11-year old NBL, situated in Dharwar, on the other hand, handles seven districts in the North Canara region of Karnataka. Its production capacity is around three million cases.

It is still not known why the Timblos have suddenly changed their mind on their 33-year-old bottling business, which was a monopoly till Coca-Cola set up its mega plant in Goa in March last year. The deal, however, is bound to cost Pepsi at least Rs 700 million.

The Timblos are one of the few industrialists who had openly defied Coke three years ago when the MNC gave an option to all its 53 bottlers either to sell their units or become partners in their joint venture. "Don't ask the farmer to sell his land; tell him to produce more efficiently," the Timblos had said at that time.

Having an upper hand in bottling and marketing Parle products like Thums Up and Limca till Coke tied up with them to stage a comeback in India, the GBC played a major role in popularising Coke among the locals as well as tourists.

As the GBC shifted to Pepsi, Coke had to struggle hard to counter Pepsi's aggressive marketing strategies. They were getting bottles from neighbouring states incurring heavy expenditure on transportation and storage. What is more, they had to offer a lot of incentives, like Pepsi, without increasing the price.

The Hindustan Coca-Cola Bottling Southwest Private Limited has now commissioned a Rs 300 million plant in Goa, having a capacity of 60,000 cases per day.

The plant had plunged into a controversy when all the 125 small local bottlers protested against the move.

Business