It was reported incorrectly Jan. 24 that Coca-Cola Co. Inc. is the only American company making soft drinks in China. Pepsico has been producing and marketing Pepsi-Cola in China since 1982.
Forget the Cold War. Here comes the Cola War.
Coca-Cola Co. has won a contract to sell Coke in the Soviet Union, ending a 10-year monopoly of that potentially huge market by rival PepsiCo Inc.
"Coke is it in the Soviet Union," said a Coke spokesman, echoing the company's slogan.
Pepsi officials had no comment.
Coke's entry into the Russian soft-drink competition is not a total surprise, analysts said. Pepsi's exclusive contract, one of the commercial highlights of the period of detente that followed President Nixon's visit to the Soviet Union in 1972, ended Dec. 31. "That opened up the opportunity for Coke to be considered, and it was snapped up," said the Coca-Cola spokesman. Pepsi will continue to be sold in the Soviet Union as well.
Truth be told, soft-drink sales in Russia are not exactly huge. Pepsi is the only cola, and Coca-Cola's Fanta orange drink has been available there for about five years.
Analysts say that Pepsi sells about 37 million gallons of soda a year in the Soviet Union, about 2 percent of its foreign sales and a tiny fraction of its overall sales. "They don't make much money off it," said Emanuel Goldman, a beverage-industry analyst for Montgomery Securities.
Still, the potential is there. Coke and Pepsi are betting that in the long run Russia's 275 million consumers will acquire a taste for what Coke used to call "the pause that refreshes."
"This is not a big deal over any sort of near-term or intermediate-term time frame," Goldman said. "This is really the kind of thing you do to position yourself for opportunities."
"When you have a potential new market of 275 million people, you can afford to wait for it to develop," Coke's spokesman said.
At first, Coca-Cola will ship in cans of Coke made elsewhere for sale to shops that serve tourists, the diplomatic corps and other foreign visitors. But the company hopes that the Soviet Food Ministry will have at least one bottling plant set up by this summer to make Coke for the general population, with Coke, as it does elsewhere in the world, shipping in concentrated syrup. The Food Ministry operates 10 plants around Russia for Pepsi, and Coke said it expects to eventually have its product bottled in several plants as well.
Although the Coke-Pepsi competition, one of the most spirited fights in the United States market, is spreading beyond the Iron Curtain, it will not yet penetrate the Bamboo Curtain: Coca-Cola, by virtue of an exclusivity arrangement that still has several years to run, has the 1-billion strong Chinese market all to itself.