Coca-Cola fizzing back

The soft drink giant has seen stiff competition from Islamic brands over the last few months, but by reinventing its image, it’s showing signs of fighting back.

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By  John Irish Published  March 6, 2003

While Zam Zam, Mecca and now Qibla Cola have all been launched in an attempt to wrestle away consumers from the American soft drinks giant, Coca-Cola has taken steps to reinvent itself in the region, after announcing a comprehensive restructuring of its Middle East operations on March 03.

The radical overhaul of its bottling plant in Saudi Arabia will see Coca-Cola’s Riyadh-based factory, which had recently stopped operating, focus on producing water and juices.

The move follows the announcement of worldwide profits of non-carbonated drinks for the beverage manufacturer of $930 million for the last quarter of 2002. Juice drinks in particular saw an increase in sales of 21% in the last year.

“The purpose of restructuring and refurbishing the equipment in Riyadh is so that it can produce parallel products. We are now diversifying; getting into waters, juices, so we needed a facility to be able to produce these other beverages,” said Philippe Georgiou, public affairs and communications manager, Coca-Cola, Middle East.

The growing boycott of America goods has seen a rise in Islamo-friendly cola alternatives, which have gradually gained in popularity. In Bahrain for example, the Iranian Zamzam cola has seen its sales surge, while over the last few months two new cola drinks, Mecca cola based in France and Qibla cola based in the UK, have been launched.

“Coca-Cola has been around for a very long time, this is our 116th year and we have seen competition coming and going at all times,” said Georgiou. “ We believe that competition is there and has always been there, but the Coca-Cola company is available in 200 countries around the world and continues to offer a superior quality at all times.”

As for the boycott of US products, Georgiou claims that while Coca-Cola may be considered globally an American brand, it sees itself on a regional level as an entirely separate entity that contributes to the local community and has no political or religious affiliations.

“In every country where we operate, we are a local business, we operate locally, we employ local people and we contribute to the economy. We have what we call a multiply effect, which means that for every employee that works in the Coca-Cola bottling plant, there are between eight and ten other workers in parallel industries that operate, whether it be suppliers or customers. All in all, we are a local company.”

On the flip side, Coca-Cola’s restructuring has seen the company’s regional management team relocate from Bahrain to Athens, suggesting that the current political climate may be taking its toll on the cola giant. However, Georgiou denied this move was related to events unfolding in the Gulf, calling it a “business decision in line with the company’s global realignment plans.”

Nevertheless, despite field operations remaining in Bahrain, the relocation process will see 28 redundancies comprising twelve Bahrainis and sixteen expatriates. In a further development, the company also sold its bottling distribution and sales operation in Lebanon to a group of investors.

Coca-Cola originally began operating from Bahrain, after an Arab boycott over its ties with Israel was lifted in 1990. It only moved its regional headquarters from Europe to Manama in 2000 to pursue a more localised approach.

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