Coca-Cola is withdrawing from the Lebanese market. For the factory workers and their families it is a disaster, for the Atlanta brand lovers it is a shock. Coca-Cola and Lebanon: a long saga that has lasted for decades, anything but a love story, more like a series of comebacks and failures. A case study that would make all the world's marketing experts cogitate. It would be easier to know the exact formula of the beverage rather than to understand the different failures of the brand on the Lebanese market, one of the only markets where the multinational could not establish itself.
It all started in 1967; after the Six Day War and the express victory of the State of Israel over its Arab neighbors, the Lebanese government decided to boycott the brand that has an activity in Israel, which causes the closure of the Coca-Cola factory in Beirut, a boycott that will last more than 25 years.
In the meantime, Pepsi took over the market, but above all the consumers' minds, three generations of young people drunk Pepsi, which has become the benchmark brand. The SMLC (Lebanese Modern Company for Trade) producer of Pepsi in Lebanon since 1952, took the opportunity to modernize its factory, expand its product range, invest massively in advertising but above all set up a huge distribution network throughout the territory with more than 30,000 points of sale: from the smallest grocery store to the big supermarkets, from the simple beach shack to the best restaurants in the city.
In the early 90s, Coca-Cola announced its comeback. The Pepsi-Coca-Cola duel is epic! The two brands invested millions of dollars in advertising and promotions. A bottle of cola became cheaper than a bottle of water. Pepsi strengthened its distribution network, there was no question of leaving the field open to this new competitor, the brand signed exclusive agreements with its customers at golden prices. The doors of restaurants started to close their doors in front of Coca-Cola which lost millions in these very expensive marketing operations. Worse, in this confrontation Coca-Cola neglected its brand image and positioned itself as a cheap product. I will always remember the negative reaction of my students in my advertising classes when I used to mention Coca-Cola as a world reference in marketing; for them, Pepsi was the star of the world!
Act two began in 2003 with the signing of a Coca-Cola / Transmed partnership, one of the largest product distributors in Lebanon (including Procter & Gamble). A second stroke of poker that was likely to succeed, but Pepsi did not give up. Marketing did not follow. The years that followed were not conducive to major investments in a country in turmoil.
Act three is by far the most ambitious when the giant Aujan acquired a majority stake in the company in July 2014. Aujan is the producer of Coca-Cola in Saudi Arabia. The company promised to invest millions of dollars and kept its word, at least for the first two years. I had the chance to manage the Coke campaign for its comeback in November / December 2014, and to launch the "Share a Coke" operation, probably the most innovative and successful activation campaign of the last decade.
Sales boosted, the market share doubled, then tripled. But it was not enough. The equation is simple: below 20% market share, the brand loses money, starting 20% it makes profit and can invest massively in communication, above 40%, Pepsi is dead: Coca-Cola opens a highway to become market leader. But we are not there yet, the brand never reached 12% market share!
The withdrawal of Coca-Cola from the Lebanese market is a major blow to the economy but above all to the country's prestige. The brand is indeed distributed in almost every country in the world. Some countries including North Korea, Cuba and Sudan are missing. And as of May 31st, Lebanon.
By: Naji Boulos - Jicébé