Peru’s ‘improbable’ Inca Kola wins out over Coke
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Reina Huamán, a 52-year-old housewife and occasional cook, returned to her home town of Trujillo this year a heroine, after a trip to Lima.
She had won a television cooking contest sponsored by Inca Kola, the country’s favourite soft drink. “This is our national drink, it is something we share at every table in Peru,” she says. Despite the whiff of product placement, she is not exaggerating the brand’s appeal.
Inca Kola is consumed across all social classes in Peru. It is very sweet, with flavours hard to discern. First-timers might find its colour and taste unpleasant. Jorge Luis Borges, the Argentine writer, was supposed to have described it as “an implausible drink”.
And since the yellow-gold beverage was introduced 80 years ago by the drinks company of a British family called Lindley, who had settled in Peru, it has been a source of national pride.
The brand’s success has even been highlighted by a leading business school. Branding Lessons from Inca Kola, the Peruvian Soda That Bested Coca-Cola, an essay published by the Wharton School of Management at the University of Pennsylvania, says: “The success of Inca Kola also reflects the uniqueness of Peruvian consumers, who tend to have very strong ties to products that they associate with personal and national identity.”
Inca Kola is, experts point out, among a few privileged beverages more popular at home than Coca-Cola. Others include Irn-Bru, the best-selling fizzy drink in Scotland.
In 1999, Coca-Cola purchased 38.5 per cent of Inca Kola shares with voting rights from the Lindley Corporation for an undisclosed sum, reported by Wharton to have been $200m, and creating what Coca-Cola’s executives now call a “strategic alliance”.
The US group has subsequently bought a further 10 per cent of shares without voting rights.
But 15 years on, Inca Kola still outsells Coca-Cola in Peru, with 30 per cent of the market against just over 20 per cent for Coke, says Alfredo Quiñones, Inca Kola brand manager at Coca-Cola in Lima.
About 90 per cent of Inca Kola is sold at small, independent shops and economists believe the continuing success of the beverage lies largely in the hands of housewives, such as Ms Huamán.
But Hajime Kasuga, a Peruvian chef who teaches at Le Cordon Bleu school in Lima and was a juror on The Inca Kola Seasoning, the television cooking contest that elevated Ms Huamán to a heroine, goes further.
“Inca Kola runs through the veins of Peruvian babies – and that is not an exaggeration.”
Kola Real: Cheap and tasteful
Residents in the slums of Armatambo on the outskirts of Lima are not given to enthusiasm. But turn the conversation to Kola Real, a fizzy drink produced by Peru’s AJE Group, and all that changes.
“Not only is it cheaper than Coca-Cola, but people love its taste,” says Uri, a store owner in a rickety local market.
In Uri’s shop, a three-litre bottle of Kola Real costs the local equivalent of $1.75; a same-sized bottle of Coca-Cola costs $3.
For impoverished Peruvians who have migrated to the capital from rural areas, the brand represents good value.
Thanks to a strategy that combines low prices with a focus on fast-growing emerging markets, family-owned AJE is one of the Peru’s biggest international corporate successes, having developed a strong presence in Latin America and Asia.
The fifth-biggest soft drinks company in Latin America, AJE last year ranked 21st of soft drinks makers globally, according to market researcher Euromonitor, with sales of about $2bn.
AJE’s global sales grew at an average of 22 per cent a year from 2000 to 2013, but its share of the global market is just 0.4 per cent, compared with Coke’s 25 per cent and 10.7 per cent for Pepsi.
For Carlos Añaños, a founder of the company and now a member of the board, “AJE’s secret of success” is based “on the democratisation of consumption – offering products with an optimal quality/price relationship”.
Additional reporting by Ben Bland
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