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  • Writer's pictureJodie

Bigger Market Opportunities for Malaysian F & B Companies

This article is extracted from Trade Mart magazine, A Malaysia External Trade Development Corporation (MATRADE) Publication. 

Ban Call on Coke and Pepsi by Tamil Nadu Traders Body Comes into Effect

A call made by two major Traders Association in Tamil Nadu, Tamil Nadu Vanigar Sangam (Tamil Nadu Trade Union) and Tamil Nadu Traders Federation, instructing over 1.5 million of their members spanning over 6,000 smaller associations to stop selling Coca-Cola and PepsiCo soft drinks across the state came into effect in 2017.

The move to ban Coca-Cola’s and PepsiCo’s soft drinks follows the allegation made by the two Traders Associations that the two American multinational conglomerates are exploiting Tamil Nadu’s authorities to produce their aerated drinks while the local farmers and public members are facing water shortage problem due to severe drought.

Both Coca-Cola and PepsiCo are using the Thamibharani River’s water for their plants near the Gangaikonadan Village in Tamil Nadu. Thamibharani River is the only perennial river and is the lifeline for farmers and people in the southern part of Tamil Nadu. Agriculture is the backbone economy of Tirunelveli district and now the farmers are faced with no water supply for the irrigation.

Subsequently, the two trade associations have also requested the state government to regulate the sales and increase the tax as well as restricting the marketing and advertising campaigns of Coca-Cola and PepsiCo. India’s carbonated drinks industry is estimated at over USD2.33 billion with an annual growth rate of 30%. The industry is dominated by Coca-Cola and PepsiCo where together they contribute to over 60% of the nation’s fast evolving beverages market. In Tamil Nadu, PepsiCo’s flagship brand Pepsi leads the market share with over 60% share.

India is still one of the lowest penetrated and lowest per capita markets for packaged beverages and it offers plenty of room for all players to grow. Currently, less than 200 million Indians consume packaged beverages and the per capita consumption of soft drink is less than 20%. The call to boycott Coca-Cola’s and PepsiCo’s soft drinks will give Malaysian food and beverage companies a golden opportunity to capture the lucrative Tamil Nadu market.

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