Marketing: Harder Sell for Soft Drinks

Into a higher corporate orbit goes U.S. Astronaut John Glenn, using a 12-oz. bottle of Royal Crown Cola as a launch vehicle. Royal Crown’s vice president for corporate development, Glenn last week was also named chair man of the company’s international subsidiary. He and Morgan J. Cramer, a former president of P. Lorillard Co. (tobacco) and now R. C. International’s president, aim to increase foreign sales 25% next year. Other U.S. soft-drink makers are also training some of their highest-priced executive and promotional talent on the foreign market, whose growth rate will soon top that of the U.S. market. Competition is so acute that companies seldom disclose the size of their foreign sales, but industry insiders estimate conservatively that the annual volume of U.S. soft drinks abroad is at least 1 billion cases—making a market of more than $1 billion.

Better than Barley Water. U.S. soft drinks have been downed—and some times damned—abroad ever since Coca-Cola uncapped the international market 66 years ago. Almost half of Coke’s $864 million-a-year sales comes from its 800 bottling plants abroad, and it still holds the largest share of the foreign market for U.S. soft drinks. Every day, from Australia to the Apennines, 85 million customers call for a Coke, referring to it as Ha-Ha in Ethiopia’s Amharic language or Ko-Kou Ko-Lo, which in Mandarin Chinese also trans lates into “palatable and enjoyable.” Coke is being pressed, though not very hard, by Pepsi-Cola, which since 1960 has doubled its foreign sales. The Coke-Pepsi battle, with its advertising campaigns, developed a market for all kinds of U.S. soft drinks. Canada Dry, Seven-Up and Orange Crush are doing well.

Bottled soft drinks are so commonly accepted that the Japanese substitute them for barley water as warm-weather refreshers, upper-caste Indians serve them at wedding receptions, and Middle East businessmen offer them to visitors as an alternative to Turkish coffee. Europeans mix their whisky with ginger ale or lemon-lime. White Rhodesians have a fad on for brandy and Coke. Zambian copper-belt workers, who once paid threepence for a home-brewed raspberry drink, now pay sixpence for “sophisticated” sodas. Everywhere, increasing ownership of refrigerators has lifted soft-drink sales. In Hong Kong, U.S. brands hold 60% of a $13 million market against such competitors as Pearl River, an aerated bottled water shipped from Red China.

Sunshine Somewhere. Not everybody enjoys the colas, and the big drive now by U.S. companies is to take over another large foreign market for fruit-base drinks. Coca-Cola has the familiar orange-flavored Fanta, as well as orange Cappy, which is not seen in domestic markets. Pepsi has a line of fruit drinks called Mirinda. The global market has few seasonal fluctuations. When cold weather comes to Europe and Japan, the sun shines all the brighter in Australia and Africa. Says Britain’s Lord Watkinson, whose Schweppes Ltd. is also a Pepsi bottler: “It doesn’t rain or snow all over the world at the same time.”

Soft-drink manufacturers find occasional flat spots among the bubbles. Low-calorie drinks have yet to catch on abroad. Manufacturers are constantly concerned about tax increases by envious governments. Last week in Italy, the Chamber of Deputies voted to increase the cola tax from 5.2% to 15.6% in order to raise money for new schools. Another problem, with can and vending-machine sales still limited, is the shortage and high cost of glass bottles. In Uruguay, for instance, a soft drink costs 110 if consumed on the spot but 180 if the customer wants to take the bottle with him. Despite that, U.S. manufacturers expect at least a 10% annual sales increase abroad for years to come.