Brazil Is a Hot Country With Terrible Term Paper

Pages: 6 (1662 words)  ·  Bibliography Sources: 0  ·  File: .docx  ·  Level: College Senior  ·  Topic: Literature - Latin-American

Brazil is a hot country with terrible water and 140 million thirsty people. Therefore, there is nothing strange, perhaps, in the fact that a vicious war has broken out to persuade Brazilians to drink one kind of cola over another. At stake is a $2 billion soft-drink market, already the world's third largest, which executives of Coca-Cola Co. And PepsiCo Inc. believe in passionately. Since 1994, the working-class consumer market has exploded in Brazil since the launch of the government's Real Plan -- named after the new currency -- which has reduced monthly inflation to less than 1% from 50%..

Multinational enterprises (MNEs) from different home regions now routinely confront one another in third-world markets. In Brazil, for instance, while U.S.-based MNEs such as Coca-Cola and Pepsi compete with European soft drink brands and indigenous drinks. The hypothesis of this paper are that the foreign MNE which wins out in the competition in a third world market is the one that knows the local market best and know how to link their product to nationalistic symbols. This paper will discuss the marketing of Coca-Cola in Brazil and discuss why Coca-Cola is leading in the soft drink competition in Brazil and why.

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Coca-cola has been well established in Brazil for a number of years, however, there has, in recent years, competition from not only Pepsi, but from indigenous drinks, such as guarana and beer. In the 1980s, Pepsi started an attack on the Cola market. Linking up in a bottling and marketing accord with Companhia Cervejeria Brahma, Brazil's biggest brewer, the company has changed a situation where cola meant Coke. Coca-Coca was able to anticipate and successfully launch a counterattack against Pepsi marketing.. Pepsi introduced screw-top bottles. To which Coke responded by declaring that with such caps, bubbles would fizzle away. Soon after, however, it launched its own screw tops in two states. This allowed Pepsi to taunt that "the other guy blinked again." There were reports of each company stealing the other's bottles. Then Pepsi launched a Tina Turner publicity campaign, to which Coke hurriedly responded with Sting, before signing up Xuxa, a blond teenybopper idol here.

Term Paper on Brazil Is a Hot Country With Terrible Assignment

In addition, Coke is now facing a new threat from mom-and-pop beverage producers taking advantage of cheap, nonreturnable bottles -- and Brazil's ancient love affair with guarana.

A boom in low-priced soft drinks, mostly guaranas, has been cutting deeply into the Brazilian market share of Coke's flagship cola, which also contains caffeine. (the market share of Coke beverages in Brazil has fallen to 46% from 58% in 1993.). While Coke has countered with two guarana brands of its own, patriotic Brazilian consumers have been less than rapturous about gringo guaranas. Coke's fiercest Brazilian rival, a guarana bottler called Cia. Antarctica, which controls one-quarter of the market for the Amazon elixir, has been ridiculing the soft-drink giant in TV ads that, in effect, accuse Coke of guarana envy.

Lindsey Schofield, who left her job as new business manager for KLP in London to set up the Rio-based team, says that it was important to understand how sales promotion fits in with Brazilian culture before planning the campaign. "Brazilians are extremely receptive to promotions, but they are very cynical about promises to win prizes. They have been ripped off so much in the past that they do not trust promotions unless they can see an immediate benefit, with no catches. Therefore, everything has to be simply communicated and expressed very visually. That means playability and collectibles are particularly effective; techniques that might seem naive and basic in Europe," she says. Unlike the English and Scottish, who are usually just grateful to see their team qualify for the World Cup, Brazilians expect nothing less than perfection. Football is a source of intense national pride and, throughout June, 160 million Brazilians will be willing their team toward the final. The pressure on the players this summer is intensified by the possibility of Brazil becoming the first country to win the World Cup five times.

Another competitor is beer. In the first two years of the plan, Brazilian beer consumption increased to 13 gallons per capita from 8.84 gallons. However, this year, beer sales have leveled off. "The consumer got into debt the end of last year. Key to that growth was Kaiser's capacity to piggyback on Coca-Cola's distribution network throughout this continent-size nation. "Building a distribution system is very difficult," says Antonio Carlos Ribeiro da Silva, Kaiser's president. "The costs are very high." Kaiser's good fortune in not having to contract third party distributors, as its rivals do, is one reason it boasts the highest return on equity in the industry, says Mr. Robarts of Santander.

However, Kaiser's emphasis on keeping its image squeaky clean may at times appear self-serving, the company takes it seriously. When competing Brahma recently launched an ad campaign featuring a young soccer star, Kaiser publicly rebuked its competitor. "We didn't like the fact they were using an idol of Brazilian youth to sell beer," says Mr. Jardim. Inevitably, the marketing activity surrounding the Brazilian team is frenetic, and at the centre of the action is an unexpected and familiar name: promotional marketing agency KLP. Last year, Coca Cola's Brazilian office hired the London-based agency to handle all of its promotions before and after the World Cup

As well as adapting to these cultural nuances, Coke and KLP have had to devise a strategy that the bottlers can buy into. This is a crucial nut to crack, as the 26 bottling groups around the country are the key to getting promotions into every corner of the massive Brazilian market. "It's very unusual to get all the bottlers involved with a campaign (they used to do their own regional promotions), so you need ideas that are strong enough to bring all of them in." The stakes are high. "Good promotions can have a dynamite effect here, with 15% increases in sales not unheard of. That's the kind of increase that can have a dramatic effect on the business and affect the share price.

Some of the first promotions developed by KLP suggest that, so far, they are hitting the right note. One of the first tasks was to come up with a theme for all the World Cup-related promotions. KLP focused on the idea that this is Brazil's chance to become the first team to win five World Cups. It devised the 'Sede de Cinque' strapline, meaning 'Thirst for Five'. Coke liked the line so much that it is now using it in all areas of its Brazilian World Cup campaign, with the logo appearing on every Coca-Cola can and promotional item, as well as in McCann-- Erickson's TV

Brazil is Coke's third-largest market in sales volume, after the U.S. And Mexico. As of now, Coke's leading 50% of the Brazilian soft drink, its dominance of the more profitable beer segment could give it the muscle it needs to wage a war for soft-drink market share Coca-Colas have 60 franchises, 26 bottling groups and 160 million consumers in a market that's as big as mainland U.S. minus Alaska.


The greatest threat to Coca

Cola's dominance of Brazil's soft is the anticipated merger of beverage giants Cia. Cervejaria Brahma SA and Cia. Antarctica Paulista SA into the world's third largest brewer, AmBev. The creation of AmBev also stands to benefit Coke rival PepsiCo Inc., since Brahma is Pepsi's Brazilian bottler. "If AmBev gets approved, its powerful position in beer distribution could put Coke at a permanent disadvantage in one of its most important markets," says Carlos Laboy, Bear, Stearns & Co.'s Latin American beverage analyst. Quite apart from any bribe that may or may not have been extended, Kaiser's motivation for fighting the creation of a company with a 72% share of… [END OF PREVIEW] . . . READ MORE

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Brazil Is a Hot Country With Terrible.  (2004, December 26).  Retrieved September 25, 2020, from

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"Brazil Is a Hot Country With Terrible."  December 26, 2004.  Accessed September 25, 2020.