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Sep

Inca Kola represents the victory of local products and brands versus global ones. It also shows how a deep knowledge of your (local) customers + strong national branding + smart marketing, can make the difference over international know-how and deep pockets. The result, the purchase of Inca Kola by the Coca-Cola Co in 1997, reinforces these messages even more.

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This is a summarized version of the story of Inca Kola tll being acquired in 1997 (story extracted from Wikipedia):


Lindley, a peruvian company founded in 1910, launched in 1935 Inca Kola, a uniquely flavored, sugary drink with low carbonation, under the slogan “There is only one Inca Kola and it’s like no other”.

By the mid 1940s, Inca Kola was already a market leader in Lima, and, thanks to innovations introduced in 1945, bottling volume expanded greatly, growing steadily and positioning it as a traditional Peruvian drink, using national and indigenous iconography and images.

Through the late 1950s, Inca Kola enjoyed an enormous surge in national consumption, reaching levels of 38% market penetration by 1970, eclipsing all other carbonated drinks in Peru and firmly establishing itself as “Peru’s Drink” . A common logo in the late 1970s and early 1980s featured the slogan “Made of National Flavor!”.

In the early years, Inca Kola began to slowly erode Pepsi and Coca-Cola’s market share through aggressive marketing and low prices. Its standing as the only national drink greatly helped to win over customers as more and more people converted for nationalistic, price and flavor reasons.

The combined marketing muscle of Coca-Cola and Pepsi could not unseat Inca Kola as the most popular drink. Inca Kola began a marketing campaign that offered money and marketing assistance to small and medium-sized restaurants. Additionally, the brand focused its marketing efforts on campaigns to persuade consumers that Inca Kola was a better complement to food than Coca-Cola or Pepsi.
In the 1980s, Pepsi’s campaign “Pepsi Challenge” (El Reto Pepsi) backfired and helped to virtually destroy the Pepsi brand in Peru, due in large part to the fact that consumers did not enjoy being told they were wrong.

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As a result of the Pepsi debacle, two rivals were left in Peru to battle in the soft drink wars, Coca-Cola, with a 21% market share, and Inca Kola with the lion’s share of 35%. Coca-Cola aggressively marketed its drink in all places, from the smallest corner store to the largest sporting event in Peru. Attempting to reinvent itself as a drink to be enjoyed with foods, a massive marketing spree tying Coca-Cola to any and all possible meals was begun, going as far as promoting itself along other brands, restaurants and placing “Coca-Cola Girls” in every possible corner of Lima.

In 1995 Coca-Cola faced two unexpected low-blows: First, Bembos, a national fast-food chain, stopped working with Coca-Cola and took Inca Kola in exchange. And then McDonald’s forced Coca-Cola to allow Inca Kola to be sold in its locales (at the time, the only place in the world where Coca-Cola agreed to such an arrangement). This was the final blow, as Inca Kola had been able to come between McDonald’s and Coca-Cola.

In 1997, the Coca-Cola Company began to negotiate with the Lindley corporation, looking to buy it out.. A deal was established in 1999 where Coca-Cola bought 50% of the Inca Kola Corporation and 30% of the Jose R. Lindley Corporation for 300 million dollars, and ceded all bottling rights for Coca-Cola products in Peru to the Lindley Corporation; a joint-venture agreement was forged for foreign markets, whereby Coca-Cola would use its marketing power to push Inca Kola in other countries. To date, Ecuador and the United States (mostly New York and the rest of the Northeast) are two of the countries where Inca Kola is bottled by the Coca-Cola Company.

During the time that the two giants were negotiating, various smaller companies began to emerge in Peru, selling drinks that competed both with Coca-Cola (Peru Cola, Cola Nacional, Inti Cola, Kola Real, etc.) and Inca Kola (Don Isaac Kola, Triple Kola, Concordia,Oro etc.). These competed mainly on price, since, by reverse-engineering, they had all come up with formulas that emulated the originals almost undiscernibly. They began to quickly eat up market share in low-income sectors of the country with down-home advertising which appealed to those families.

Their main point of attack was the fact that Inca Kola was no longer a Peruvian company, having sold out to a foreign company, and therefore not deserving of their money. But the Inca Kola brand was so strong at that point that no manner of advertising attempts were able to break it. As for today, Inca-Kola still dominates the soft drink market in Peru with a market share of 31% compared to the 26% that Coca-cola has.

I don´t know what is more amazing to me: The ability of Peruvian marketers to make Coca-Cola bend its knee, or the resolution of The Coca-Cola Co to lead the spirits market all around the World, no matter at what price.

Think Different!!!

Ignacio Gafo

Comments

Juan Camilo Castro S September 21, 2008 - 5:19 pm

Ignacio, que interesante tu artículo, la verdad me hace recordar el caso de Postobon en Colombia, una empresa creada a principios del siglo XX y que le ha hecho una fuerte guerra a Coca-Cola, no solo en sus productos de bebidas gaseosas (en donde compite fuertemente con sus producto colombiana y colas postobol, Frescola e Hipinto, con una estrategia de marketng que apunta al sentimiento nacionalista llegando a todos los rincones del país), sino también en el de bebidas refrescantes a base de jugos y energizantes.

Aunque ellos tienen la distribución para colombia de los productos de bebidas de pepsico (pepsi y 7up), no son estos en realidad los productos bandera en su portafolio, ni la competencia fuerte que amenaza a Coca-Cola, son los demás productos, los nacionales.

Revísate la página para que encentres algo más de información: http://www.postobon.com/PostobonSA/default.asp

Un abrazo.

JCC

International SEO October 11, 2008 - 12:06 pm

Nice write up!

Just to make a quick clarification. Inka Kola is not by any means the Peruvian National beverage, especially after they sold out. Purple Corn Drink, known as Chicha Morada, is the Peruvian national beverage.

History tells that the way the Lindley’s started their marketing campaign was by going to every fancy Peruvian eatery/dinner/restaurant and asking whether they carry the soda. If the establishment did not have Inka Kola, they immediately left. Since they were an affluent family and considered good patrons, restaurants started carrying the soda to better cater to their needs.

Here in Denver, Colorado we also get Inka Kola. However, I find the taste a tad different than the one made in Peru. The USA version also has way more caffeine than its Peruvian counterpart. We had to give up on it because of its after effects. Inka Kola’s caffeine level is probably twice or three times higher than Coke, or at least it feels that way.

Cheers,

Augusto Ellacuriaga

Aristotele October 28, 2008 - 1:55 pm

Hi Nacho!
Very interesting article!
If I remember well there is a similar situation in Turkey with the “Cola Turka” although I don’t think that this soft drink has a larger market share than Coca-Cola.
In my opinion in these specific situation a key element is the external environment (e.g. Coca-Cola view as the US symbol-> Important the US image in the country-> local &political situation). In any way I think that it’s quite difficult to see ” Coca-Cola bend its knee”… I remember the huge promotion effort made by Virgin in 90’ but the result was not the same than Inca Cola..
Ciao
Aristotele

jigafo October 28, 2008 - 4:39 pm

An international brand like Coca-cola is indeed an american icon. In most cases it will be a plus, but in some exception it will become a drawback as you suggest.

Coca-cola will never bent its knee, so what they will surely do then is to acquire a local player as they did here.

Thanks for comment.

Marc Meyer August 11, 2010 - 10:38 am

This story show simply that all is possible when you want ! We are tired with this american way of life (wich life !) now we decided to live the Swiss way of life and it is much more better. http://www.swiss-cola.ch.
We have create the first cola in the world with Edelweiss flower and with Swiss Alps source water.
If you can travel to Switzerland, try Swiss-cola for a better way of life ;-) Marc From Switzerland

Giuliana Gutierrez Rivera August 26, 2010 - 8:01 pm

definitivamente inka kola además de ser un símbolo Peruano es un orgullo tambien .Somos uno de los paises, por no decir el único en donde la companía transnacional Inka Kola no pudo competir, el sentimiento nacionalista y la estrategia de marketing de Inka Kola en nuestro pais ha hecho que tomemos esta bebida como acompanamiento con nuestros platillos tan deliciosos, como el slogan dice Inka Kola la bebida de sabor nacional y que combina con todo , sin duda alguna una mesa no puede prescindir de una Inka Kola bien helada.

renzo menacho chavez August 27, 2010 - 12:11 am

por larga historia inka kola es una insignia del orgullo peruano es una de las primeras gaseosas que salio a otros paises fuera del pais para consolidar el sabor y producto peruano , el marketing de Inka Kola en nuestro pais es de que tomemos esta bebida como acompanamiento con nuestros platos tan deliciosos, como el slogan dice Inka Kola la bebida de sabor nacional y que combina con todo .

Louis December 1, 2010 - 9:53 pm

Very interesting story , I like the idea that a smaller regional brand such as Inka Kola dominated a huge force such as coca cola but they sold out in the end for 300 million so who won in the end . Now inka kola has lost a degree of respect in the peruvian community even though it hasnot really affected sales. Big companys like coca cola will just buy you if they can not beat you. It makes you worry about how much power these big companys have in the world.

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coach factory stores December 11, 2010 - 9:35 am

Bien hecho y gracias a todos.*

Shj February 9, 2012 - 3:47 am
CAROLYN May 21, 2014 - 2:09 am

IS THE INCA KOLA BOTTON ANY GOOD FOR SALE

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