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Pepsi thrives in Syria after 50-year-ban ends--soft drinks review.

THE SOFT drinks market in Syria is undergoing unprecedented growth, expected to surge 17%-18% this year over last year's 12% growth, and Pepsi's share of the market growing after just under a year of operations in the country.

Pepsi, which is franchised to Syrian drinks manufacturer Joud, was launched in August last year following a decision by Syria's economy minister to lift a ban on certain US and western firms that were blacklisted over 50 years ago by the Damascus-based Bureau for the Boycott of Israel.

Largely due to strong sales of Pepsi and 7 Up, Joud's market share is expected to increase from 47% of the Syrian US$100 million soft drinks market to 50% by year end, according to Lilas Rabbat, a Joud marketing manager.

To overcome any possible anti-American sentiment connected with the brand, Joud marketed Pepsi very hard with TV slots, radio jingles and billboards. "We didn't give it a chance to be a foreign brand. We made it known it was bottled here, and used the same marketing strategy we did for 7 Up," said Rabbat.

Pepsi is also introducing new forms of packaging every two months, including new flavours, to expand market share.

Joud is not exporting Pepsi to Iraq or Jordan however due to its franchise agreement with Pepsi-Co, as Pepsi is also bottled locally in both countries. Joud stopped exporting its other brand, Mandarin, to Iraq as it was considered a small market and fraught with logistical problems.

Coca-Cola on the other hand is not faring as well in the Syrian market, despite also being taken off the blacklist. With no bottling plant Coca-Cola is imported from Jordan and Lebanon, but sales account for less than 2% of the market.

Affecting sales is the price of a can of Coca-Cola, which sells for SP20--Syrian Pounds (US$0.26). "Price is very important here," said Rabbat, where low-level government employees earn between US$100 to US$150 a month. Cans of Pepsi, like any other soft drink, sell for 15SP (US$0.34).

Management problems with the Coca-Cola franchise have also affected a potential launch. Coca-Cola was run by the son of the recently disgraced former Vice Preisdent Abdel-Halim Khaddam, who is now in exile in France following an outburst against President Bashar Assad at the end of 2005. His son has reportedly sold his shares in the franchise to a Saudi investor. Coca-Cola is expected to launch in the next few months, although a Coca-Cola spokesman was not available to confirm this.

"If Coca-Cola starts manufacturing, they are not to be underestimated. They have learnt from Pepsi's experience how to market here. They will copy us," said Rabbat. But as people associate Coca-Cola with America more than Pepsi, Joud would still be at a marketing advantage, added Rabbat.

Boycott campaigns in 2001 throughout the Arab world in a show of solidarity with the second Palestinian uprising, saw Coca-Cola lose market share and Pepsi control 75% of the Middle East market, which it has retained, if not expanded, due to its presence in Syria. Pepsi's strong marketing in Syria has also had other impacts. "A year ago people would have said give me a cola, but now they say Pepsi. They say it tastes better than the others," said shopkeeper Manaf Abdulghani.

However, despite such changes in mentality not everyone in Syria is happy with Pepsi or Coca-Cola's presence. Asking a waiter in a restaurant that had a Coca-Cola fridge in the corner whether the establishment had Coca-Cola or Pepsi, he said it was "forbidden." "These companies support Israel and America, we only have Mastercola," he said, referring to one of Syria's 100 smaller brands of soft drinks.

American brands are also up against resistance from Syrian officials, despite the government's moves to attract investment, deregulate and lower unemployment.

Nabil Marzouk, coordinator of the committee for Boycotting American Goods and Interests in Syria, who is also an advisor to the Deputy Prime Minister for Economic Affairs, was quoted recently as saying that western brands should be boycotted to send a message to Washington DC to alter its foreign policy.

PAUL COCHRANE, in Damascus
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Author:Cochrane, Paul
Publication:International News
Date:Jul 1, 2006
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