There is a new conflict in Burma, but it is not between ethnic groups. When trade sanctions were lifted Coke and arch-rival pepsi quickly established a presence in the country.
When trade sanctions were lifted on Myanmar (Burma), The Coca-Cola Company was one of the first companies to enter the newly opened market. Back in September Coca Cola began shipments of its fizzy soft-drink to the long isolated nation. Now, Pepsi Co. is looking to one up Coca Cola by being the first to establish a bottling plant in the country.
Most people living outside of isolated nations will take drinking a Coca Cola or Pepsi for granted. After all, it’s just a Coke, right? For people living under isolated regimes, American soft drinks are one of the most enduring symbols of freedom. When the Communist regime in Eastern Germany fell, crates full of Coca Cola were shipped to Eastern Germans and quickly became a symbol of freedom.
During World War II, Vietnam, and every other war Coca Cola was widely distributed and drank by American troops and their allies. On numerous occasions Coca Cola has been distributed to civilian populations under American control with hopes that introducing locals to the Western delight would help win them over.
Whether deservingly or not, soft drinks have become an enduring symbol of Western Capitalism and Democracy for oppressed peoples. Coca Cola itself takes pride in being the most widely available drink in the world (excluding water) and the brand is now one of the most recognized in the world. Coca Cola is also regarded as the most valuable brand name in the world, beating other renowned companies, such as Apple and Toyota.
Coca Cola’s close association with United States culture has come at a cost, however, and the company is frequently targeted in anti-American protests. When the United States invaded Iraq in 2003, protesters in Thailand poured Coca Cola into the streets and sales were temporarily suspended. From 1968 to 1991 Coca Cola imports were banned in many Middle Eastern countries due their sales to Israel. Iran has recently threatened to suspend sales of the soft-drink. Venezuelan President Hugo Chavez has spoken out against both Pepsi and Coca Cola, urging people to drink local fruit juice instead.
Given these circumstances it is unsurprising then that Coca Cola would be one of the first entrants into the newly open market. The company prides itself on being an American symbol and takes its brand value seriously. The U.S. began lifting sanctions on Myanmar on April 4 2012 and by September 10th 2012 The Coca-Cola Company (NYSE:KO) was already shipping its drinks into the country.
Now Pepsi is looking to gain an advantage on The Coca-Cola Company (NYSE:KO) by opening a bottling plant in Myanmar within the next 12 months. Currently, Pepsi Co has signed an agreement with a local distributor, Diamond Star, to distribute Pepsi products throughout Myanmar. Most likely Diamond Star is one of Myanmar’s largest companies and will also likely be closely involved in any bottling venture. Coca Cola has also announced plans to open up a bottling plant, though concrete details are not yet available.
Coca Cola and Pepsi have long been embroiled in an intense competition for seizing new markets. When Middle Eastern countries banned The Coca-Cola Company (NYSE:KO) over sales to Israel, Pepsi was more than happy to pick up the demand. Pepsi was also far more aggressive about entering the Soviet Union, trading syrup for Vodka that was then resold in the United States. This helped it secure an early lead over Coca Cola. Now it appears that PepsiCo, Inc. (NYSE:PEP) is hoping to do the same again by establishing a local bottling plant.
With Myanmar representing one of the last few untapped markets in the world, competition will likely be intense. As of now, Coca Cola and PepsiCo, Inc. (NYSE:PEP) can be found in nearly every country around the world. Only a few countries, such as Cuba, North Korea, and Somalia, lack legal access to Coca Cola and Pepsi products. Myanmar thus represents one of the last few untapped markets for the soft-drink giants and as such, competition will most likely be disproportionately fierce.