Highlands takes on Coke with new soft drink brands

Nyeri-based Highlands Mineral Water Company is angling for a slice of the lucrative soda business currently dominated by global giants Coca-Cola and PepsiCo.

Highlands, one of Kenya’s pioneers of bottled water, last year started producing three brands of soda; Cola, Lemon, Lime and Orange, available in 300ml, 500ml and 1.25 litre plastic bottles.

A fortnight ago, the firm added two more variants –Tangawizi and Lemon to its Club Soda brand. “We are optimistic they will do well in the market,” said the firm’s Chief Executive Officer Ashwin Padia (pictured).

The 60-year old company is the latest to venture into soda production, after Bidco and Kevian Kenya. The company is seeking to capture increasing demand for soft drinks, which has grown steadily over the last decade, attributed to rising disposable incomes.

The sector, buoyed by rapid growth, has seen beverage firms up production to 407.028 million litres in 2013 down from 359.518 million in 2012 according to the Kenya National Bureau of Statistics (KNBS) data. KNBS figures on soft drinks production, in the first 11 months of last year, show total production jumped by 14 per cent to 414.31 million litres from 363.493 million litres in the previous year.

Highlands, which until last year only produced bottled water and juices (both concentrates and ready to drink), says it has established a countrywide network of distributors and stockists of their new drink, terming the uptake of its products as ‘promising’.

“The uptake of Club Soda brands has surpassed our expectations, thanks to our consumers who continue to give us useful feedback about our different brands. We are happy to report that the Independent Nielsen Research ranks us number two in the one way segment,” said Padia in an interview with Weekend Business.

Padia said the entry into the soda business is culmination of research that established huge potential. “We did an independent piece of research, and established that consumers were in need of quality yet affordable soft drink,” he said. “Having already been in the beverage sector and playing successfully, it was an easy decision to transition to carbonated soft drinks.”

Currently a litre of their soda is retailing at Sh99 for home consumption while 300ml goes for Sh25.

He said what the firm is seeking is to democratise consumption of carbonated soft drinks and “make Club Soda affordable to Kenyans.” The company is leveraging on the goodwill of its customers to up sales.
Kuguru Foods, which launched the Softa brand a few years ago to rival Coca-Cola, has been overshadowed by competition from the cash-rich multinational.

Cut the dominance

The beverage market has seen increased competition, drawing in beer manufacturer East African Breweries Ltd which launched several flavours of the non-alcoholic malt drink, Alvaro, in April 2008. The entry of EABL rattled Coca-Cola, which saw the move as a threat to its share of the non-alcoholic drinks market. In November 2008, the firm introduced its own malt-based drink, Novida, in a move industry watchers read as a reaction to EABL’s assault.

Pepsi Cola made a re-entry into the Kenyan market in late 2010 following an exit in the 1970s. It was relying on imports to serve the local market. However, in 2013, it decided to set up a Sh2.6 billion soft drinks manufacturing plant in Nairobi’s Ruaraka area, through Seven Up Bottling Company (SBC) Kenya Ltd, a franchise bottler and distributor of Pepsi products.

This upped the jostling for control of the market as PepsiCo sought to cut the dominance of Coca- Cola. PepsiCo, for instance, offered a larger product of 350ml bottle that is retailing at the same price as Coca-Cola’s 300ml bottle.

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