Economy

Big Cola From Peru, an Inspiration for Indian Entrepreneurs

Aje's Big Cola. Credit: nstands

Aje’s Big Cola. Credit: nstands

There is not a single recognizable Indian cola drink company left in the market after the sweeping entry of big giants Coke and Pepsi. While the Indian companies have surrendered or sold themselves off without a fight, Aje, a cola company from Peru in South America has had the audacity to bet on India, where its Big Cola brand has found a niche.

Aje entered India in 2010 and set up a bottling plant in Patalganga in Maharashtra, and has subsequently secured an 8% share of the market in the state. It plans to expand to the rest of India and set up 20 plants, and add fruit juices, bottled water and energy drinks as well to its repertoire. The company employs four hundred Indians and five Peruvians, and runs a lean production and distribution block. It does play the multi-crore game of cricket sponsorships even as it runs a modest marketing campaign with the slogan “Chhodo Purana, Badla he Zamana!”

The brand is targeting the ‘bottom of the pyramid’ where Coke and Pepsi are too expensive. They market themselves as a ‘fair-price’ drink to low-income consumers and talk about the democratization of consumption. With this strategy, they see a significant opportunity in the large and growing low-income population segment of India. Aje has worked its way up and has put Big Cola in the shelves of Big Bazar, Reliance, D Mart, Metro, Tesco and other chains. The credit for its success in India goes to Mr. Pantoja Cadillo, the head of the company in India since 2009.

Mr. Cadillo came with some Asian experience after his stay in Thailand. But he found India to be very complicated and challenging. In the beginning, when he was searching for land for the plant, he was taken for a ride by the Indian real estate agents. He now lives in Navi Mumbai with his family, and has adapted well to the Indian way of doing business. Although Gujarat offered more incentives and has lower taxes, he chose to go with Patalganga, which is located between Mumbai and Pune, both areas of high population-density.

During the 1980s, Peru became unsafe due to the terrorist war unleashed by the Sendero Luminoso (Shining Path) guerrillas. The Coke and Pepsi trucks could not deliver to interior areas that were controlled by guerillas. However, the Ananos family saw a business opportunity and started producing cola drinks in Ayacucho, a small town that was also a major centre of guerrilla activities. As a result, Aje was born in 1988, and went on to establish a national presence in Peru by 1997.

The international foray commenced in the late 1990s, with the company entering Venezuela in 1999, Ecuador in 2000, Mexico in 2002, Central America in 2004, Thailand in 2006, India, Vietnam and Indonesia in 2010, and Brazil in 2011. Aje’s products are now sold directly or through agents in over 20 countries in Latin America, Asia and Africa. Besides its flagship brand Big Cola, the company also has branded products of fruit juice, instant tea, bottled water, energy and sports drinks as well as beer. The Ananos family owns all the shares.

Aje is the fourth largest producer of carbonated soft drinks and the tenth largest soft drink company (by sales) in the world, with annual sales topping three billion litres out of 30 plants. At the same time, it does not consider itself a competitor to Pepsi or Coke, content to be categorized as a B-brand. Its focus is only on emerging markets, especially where the lower-middle-class is burgeoning. Its global ambitions have been boosted particularly by its success in Mexico, one of the top soft drinks markets in the world with a high per capita consumption of carbonated drinks. Aje fought its way through the oft-intense tussle between Pepsi and Coke and managed to get a sizable share of the market. After this, they were able to get a double-digit percentage of the market in Indonesia as well. Conquering these two large emerging markets ultimately gave Aje the confidence to knock on India’s doors.

The success of Aje is a lesson to Indian entrepreneurs who face challenges from multinationals. It could also serve as inspiration for those Indian companies that aspire to go global and find niche markets for their products.

Rengaraj Viswanathan has served as India’s first consul general in Sao Paulo, Brazil, and as ambassador to Venezuela, Argentina, Uruguay and Paraguay. He writes regularly on Latin American affairs.