Pepsi is to pull the plug on sales in Indonesia, it has announced in a long-anticipated move which comes as rival Coca-Cola plans to expand in the market.
Soda drinks have shown a marked fall in sales in the country in recent years, analysts say, largely due to a preference for other sweetened drinks like tea and coffee, plus rising consumer concerns about sugar consumption.
A statement from ICBP, Pepsi’s Indonesian partner, said its subsidiary, Anugerah Indofood Beverage Makmur (AIBM), would not be renewing its five-year agreement with PepsiCo Inc, the Jakarta Post reported.
Under the deal, AIBM had exclusive rights to produce, sell and distribute all non-alcoholic drinks under PepsiCo’s brands; these included Pepsi, Mirinda, 7Up and Mountain Dew, none of which will now be available in the country.
News of the announcement had been rumoured for several months. Indonesian Food and Beverage Producers Association (Gapmmi) chairman Adhi S. Lukman told the Post the move was expected since sales of soda drinks had continued to fall in the past few years.
“Soda beverage sales in Indonesia have declined by about 1% to 2% annually over the past five to six years,” he said.
Despite this decline, Coca-Cola has launched a new $24m production line in Pasuruan, East Java. The Coca-Cola Amatil plant will produce the company’s new ‘affordable small sparkling package’ (ASSP) bottles, aimed at reducing plastic waste and promoting sustainable packaging in the country. Coca-Cola Amatil is one of five Coca-Cola bottlers around the world.
“Production from Pasuruan will be distributed throughout East Java, Bali and East Indonesia,” Coca-Cola Amatil Indonesia president director Kadir Gunduz said, forecasting increased demand for food and beverage products in Southeast Asia’s largest economy.
Coca-Cola Amatil Indonesia also produces Sprite, Fanta, Frestea products, Minute Maid fruity drinks, Ades mineral water and Schweppes.
Restaurants across the country are now expected change their drinks menus from Pepsi to Coca-Cola, as has been announced by Sarimelati Kencana, which operates the Pizza Hut chain in Indonesia.
“We’ll gradually replace Pepsi drinks in our restaurants with drinks from the Coca-Cola brands until the end of this month,” Sarimelati Kencana operations and marketing director Jeo Sasanto told the Post.
Jeo added that Pizza Hut had heard about the Pepsi exit in August, giving the company time to prepare a strategy to keep the supply of carbonated drinks flowing for the restaurant’s customers.
Sourced from Jakarta Post; additional content by WARC staff